Assume that an economy's real GDP multiplier is 4 . If this economy is in equilibrium at $2,000 billion, then which one of the following actions will bring it to a full-employment equilibrium of $1,500 billion?

a. $500 billion spending cut.
b. $500 billion spending increase.
c. $125 billion spending cut.
d. $125 billion spending increase.
e. $2,000 billion spending cut.


c

Economics

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