11. The economy is in long-run equilibrium. Pessimism on the part of investors then shifts the
aggregate demand curve $50 billion to the left. The government wants to increase spending in
order to avoid a recession. If the crowding-out effect is always half as strong as the multiplier
effect, and if the MPC equals 0.8, by how much does government purchases have to rise?
(A) $10 billion
(B) $20 billion
(C) $50 billion
(D) $80 billion