If the government purchases multiplier equals 2, and real GDP is $1.7 trillion with potential real GDP of $1.75 trillion, then government purchases would need to increase by ________ to restore the economy to potential real GDP.
A) $1.75 trillion
B) $500 billion
C) $100 billion
D) $50 billion
E) $25 billion
Correct Answer:
Verified
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A)
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A)will lower disposable income and lower
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Q149: An equal increase in government purchases and
Q150: If the federal government wanted to counteract
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