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

question 33

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 increase spending to restore potential output?

• A) $333 billion
• B) $300 billion
• C) $250 billion
• D) $750 billion