During a Recession, Analysts at the CBO Project That the Economy

question 158

Multiple Choice

During a recession, analysts at the CBO project that the economy is operating $750 billion below potential output. Assuming the MPC is 0.6, by how much would the government have to cut taxes to restore potential output?

• A) $375 billion
• B) $300 billion
• C) $350 billion
• D) $500 billion

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