Table 13-3
All figures in billions of base-year dollars

-Refer to Table 13-3. Suppose the equilibrium level of real GDP at the prevailing price is $500 billion below potential real GDP. All else constant, by how much should autonomous aggregate expenditures be increased to reach potential output?
A) $150 billion
B) $200 billion
C) $400 billion
D) $500 billion

Question

Table 13-3
All figures in billions of base-year dollars
 
-Refer to Table 13-3. Suppose the equilibrium level of real GDP at the prevailing price is $500 billion below potential real GDP. All else constant, by how much should autonomous aggregate expenditures be increased to reach potential output?
A) $150 billion 
B) $200 billion 
C) $400 billion 
D) $500 billion

Quizplus · Accepted Answer

To close a $500 billion GDP gap, the increase in autonomous aggregate expenditures should be $200 billion, assuming a multiplier effect.

Table 13-3 All Figures in Billions of Base-Year Dollars