You Are Given the Following Information About Aggregate Demand at the Existing

question 32

Multiple Choice

You are given the following information about aggregate demand at the existing price level for an economy: (1) consumption = $500 billion, (2) investment = $50 billion, (3) government purchases = $100
Billion, and (4) net export = $20 billion. If the full-employment level of GDP for this economy is $620
Billion, then what combination of actions would be most consistent with closing the GDP gap here?

• A) increase government spending and taxes
• B) decrease government spending and taxes
• C) decrease government spending and increase taxes
• D) increase government spending and decrease taxes

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Definitions:

Spherical Objects

Spherical objects are three-dimensional shapes perfectly round in shape, similar to a ball.

Olympus Mons

The largest volcano in the solar system, located on Mars, standing about 22 kilometers high.

Volcano

An opening in the Earth's surface through which molten rock, ash, and gases are ejected or flow out.

Tectonics

The study of the Earth's structural features, including its crust and mantle movements, which can lead to earthquakes, volcanoes, and mountain building.