Use the Following to Answer Questions

question 105

Multiple Choice

Use the following to answer questions .
Exhibit: Real GDP and the Multiplier

-(Exhibit: Real GDP and the Multiplier) Suppose the equilibrium level of real GDP at the prevailing price is $500 billion below potential real GDP. All else constant, by how much should autonomous aggregate expenditures be increased to reach potential output?

• A) $150 billion
• B) $200 billion
• C) $400 billion
• D) $500 billion

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Definitions:

Payroll Tax

Assessments collected from employers or employees, typically proportional to the salaries that workers are paid.

Labor Market

A marketplace where employers find workers and workers find jobs, involving the exchange of labor for compensation.

Payroll Tax

A tax imposed on employers and employees, calculated as a percentage of the salaries that employers pay their staff.

Per-hour Wage

The amount of money paid to an employee for each hour of work.