Suppose real GDP is $12.6 trillion and potential GDP is $12.4 trillion. To move the economy back to potential GDP, Congress should
A) lower government purchases by an amount less than $200 billion.
B) lower government purchases by $200 billion.
C) raise taxes by $200 billion.
D) lower taxes by $200 billion.
E) raise taxes by an amount more than $200 billion.
Answer: A
You might also like to view...
What are the factors that change the supply of saving and shift the supply of loanable funds curve?
What will be an ideal response?
Suppose the government has declared beer to be an illegal substance and imposes a fine on anyone caught buying a beer. Selling beer, however, remains legal
Using the above figure, in which CBL is the cost of breaking the law, what is the equilibrium price and quantity with this new law in effect? A) $5 per quart and 300 quarts of beer B) $3 per quart and 500 quarts of beer C) $3 per quart and 100 quarts of beer D) $1 per quart and 300 quarts of beer
Merchandise exports minus imports equal the
A) basic balance. B) liquidity balance. C) official settlements balance. D) balance of trade.
A downward-sloping portion of a long-run average total cost curve is the result of:
a. economies of scale. b. diseconomies of scale. c. diminishing returns. d. the existence of fixed resources.