Consider a Simple Macro Model with Demand-Determined Output

question 84

Multiple Choice

Consider a simple macro model with demand-determined output.Suppose the level of exports decreases unexpectedly by $6 billion.If the government wants to restore the initial equilibrium level of output it could,all other things equal,

• A)increase its purchases by more than $6 billion.
• B)increase its net tax revenues by $6 billion.
• C)increase its net tax revenues by less than $6 billion.
• D)increase its purchases by $6 billion.
• E)decrease its purchases by $6 billion.

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