Suppose Real GDP Is $13 Trillion,potential Real GDP Is $13

question 304

Multiple Choice

Suppose real GDP is $13 trillion,potential real GDP is $13.5 trillion,and Congress and the president plan to use fiscal policy to restore the economy to potential real GDP.Assuming a constant price level,Congress and the president would need to increase government purchases by

• A)$500 billion.
• B)less than $500 billion.
• C)more than $500 billion.
• D)None of the above are correct.Congress must act to decrease government purchases in this case.

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Definitions:

Mere-Exposure Effect

A psychological phenomenon by which people tend to develop a preference for things merely because they are familiar with them.

Emotional Stability

Refers to the ability of an individual to remain stable and balanced in their emotions rather than being easily upset or emotional.

Mutual Attraction

A shared physical or emotional pull between two individuals, leading to a potential relationship or connection.

Pleasing Disposition

A personality trait characterized by a tendency to be agreeable, amiable, and seek to make others happy.