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

question 370

Multiple Choice

You are given the following information about aggregate demand at the existing price level for an economy: (1) consumption = $400 billion, (2) investment = $40 billion, (3) government purchases = $90
Billion, and (4) net export = $25 billion. If the full-employment level of GDP for this economy is $600
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:

Affirmative Action

Policies and practices designed to increase opportunities for historically underrepresented groups in various areas of society, including education and employment.

Melting Pot

A metaphor for a heterogeneous society becoming more homogeneous through the blending of different cultures, ethnicities, and nationalities.

Racial Perceptions

The ways in which people view and understand race, often influenced by societal norms, stereotypes, and personal experiences.

Potential Growth

The possible increase in an economy's output and productivity over time, considering the available resources and technology.