Suppose real GDP is $1.4 trillion and potential GDP is $1.9 trillion.To move the economy back to potential GDP, the federal government should
A) lower taxes by an amount less than $500 billion.
B) raise government purchases by $500 billion.
C) raise government purchases by more than $500 billion.
D) lower taxes by $500 billion.
E) lower government purchases by $500 billion.
Correct Answer:
Verified
Q135: Suppose the federal government increased spending by
Q136: Figure 12.11 Q138: If the tax multiplier is -1.5 and Q139: Suppose the government spending multiplier is 2.The Q141: The government purchases multiplier is defined as Q142: Cutting taxes Q143: A tax rebate by the government would Q144: Suppose real GDP is $1.7 trillion, potential Q145: If the government purchases multiplier equals 2, Q147: If government increases taxes by the same
A)
A)will lower disposable income and lower
A)increase
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents