Multiple Choice
You are given the following information about aggregate demand at the existing price level for an economy: (1) consumption = $500 billion; (2) investment = $50 billion; (3) government purchases = $100 billion; and (4) net export = $20 billion.If the full-employment level of GDP for this economy is $620 billion, then what combination of actions would be most consistent with the goal of achieving price level stability?
A) increase government spending and taxes
B) decrease government spending and taxes
C) decrease government spending and increase taxes
D) increase government spending and decrease taxes
Correct Answer:
Verified
Correct Answer:
Verified
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