Suppose Real GDP Is $12

question 104

Multiple Choice

Suppose real GDP is $12.1 trillion and potential GDP is $12.6 trillion.To move the economy back to potential GDP,Congress should

• A)lower taxes by an amount less than $500 billion.
• B)raise government purchases by $500 billion.
• C)raise government purchases by more than $500 billion.
• D)lower taxes by $500 billion.
• E)lower government purchases by $500 billion.

---

Definitions:

Compounded Monthly

The process of calculating interest on both the initial principal and the accumulated interest of previous periods on a monthly basis.

Semi-Annually

A term referring to an event or action that occurs twice a year.

Quarterly

Occurring every three months or four times a year, often referring to financial reporting or dividend payments.

Increases in Value

Situations or circumstances where the value of an asset, investment, or property rises over time.