Suppose Real GDP Is $14 Trillion and Potential Real GDP

question 306

Multiple Choice

Suppose real GDP is $14 trillion and potential real GDP is $14.4 trillion.An increase in government purchases of $400 billion would cause real GDP to ________ potential real GDP (assuming a constant price level) .

• A)equal
• B)be less than
• C)be more than
• D)There is insufficient information given here to draw a conclusion.

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Definitions:

Shrimp Market

The market or industry segment concerning the buying, selling, and trading of shrimp as a commodity or food product.

Quota Limit

A government-imposed trade restriction that sets a physical limit on the quantity of a good that can be imported or exported during a specific time frame.

Price Ceiling

A legal maximum price set by the government for certain goods or services, intended to prevent prices from becoming too high.

Tariff

A tax imposed by a government on imported or, less commonly, exported goods to protect domestic industries or to generate revenue.