Assume that equilibrium output is $10 billion while potential output is $20 billion. If the marginal propensity to consume is 0.8, which of the following recommendations would a Keynesian economist recommend?
- Congress should increase taxes by $2 billion.
- Congress should increase taxes by $10 billion.
- Congress should increase spending by $10 billion.
- Congress should increase spending by $2 billion.
- Congress should increase spending by $5 billion.