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

question 118

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 decrease taxes by

• A)$500 billion.
• B)less than $500 billion.
• C)more than $500 billion.
• D)None of the above are correct.Congress should raise taxes in this case.

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Definitions:

Turned "On"

Refers to activating or starting the operation of a device or system, making it ready for use.

Turned "Off"

A phrase indicating something is inactive, not in operation, or not engaged.

Dim Illumination

Refers to low levels of light in an environment, impacting visibility and sometimes mood or behavior.

Rods

Photoreceptor cells in the retina of the eye that are highly sensitive to light and enable vision in low-light conditions.