Assume that an economy's real GDP multiplier is 2 and that this economy is in equilibrium at $500 billion. If the government wants to move this economy to full-employment at $600 billion, while maintaining a balanced budget, it must choose which of the following options?

A. Increase government spending and taxes by $100 billion
B. Decrease government spending and taxes by $100 billion
C. Increase government spending and taxes by $200 billion
D. Decrease government spending and taxes by $200 billion


Answer: A

Economics

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