Suppose the economy is operating at an output level of $5,400 billion. Assume furthermore that potential output is $5,000. Which of the following would be necessary to close this inflationary gap if the marginal propensity to consume is 0.75?
a) raise taxes by $400 billion
b) increase spending by $100 billion
c) Decrease spending by $100 billion
d) increase spending by $400 billion