Suppose Real GDP Is $1

question 199

Multiple Choice

Suppose real GDP is $1.7 trillion, potential real GDP is $1.8 trillion, and the federal government plans to use fiscal policy to restore the economy to potential real GDP.Assuming a constant price level, the federal government would need to increase government purchases by

• A)$100 billion.
• B)less than $100 billion.
• C)more than $100 billion.
• D)None of the above is correct.The federal government must decrease government purchases in this case.

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Definitions:

Eaton

A multinational power management company known for its products in electrical components and systems for power quality, distribution, and control.

Transmission Control System

A system in vehicles that uses electronic sensors, processors, and actuators to control gear shifts and optimize engine performance.

Single ECU

Refers to a vehicle having one Electronic Control Unit responsible for overseeing and managing the engine's performance and other systems.