During a recession, analysts at the CBO project that the economy is operating $750 billion below potential output. Assuming the MPC is 0.6, by how much would the government have to cut taxes to restore potential output?
A) $375 billion
B) $300 billion
C) $350 billion
D) $500 billion

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The Answer of During a recession, analysts at the CBO project that the economy is operating $750 billion below potential output. Assuming the MPC is 0.6, by how much would the government have to cut taxes to restore potential output?
A) $375 billion
B) $300 billion
C) $350 billion
D) $500 billion

During a Recession, Analysts at the CBO Project That the Economy