Multiple Choice
During a recession, analysts at the CBO project that the economy is operating $1.5 trillion below potential output. Assuming the MPC is 0.8, by how much would the government have to increase spending to restore potential output?
A) $500 billion
B) $300 billion
C) $1.2 trillion
D) $800 billion
Correct Answer:
Verified
Correct Answer:
Verified
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