Solved

During a Recession, Analysts at the CBO Project That the Economy

Question 33

Multiple Choice

During a recession, analysts at the CBO project that the economy is operating $750 billion below potential output. Assuming the MPC is 0.6, by how much would the government have to increase spending to restore potential output?


A) $333 billion
B) $300 billion
C) $250 billion
D) $750 billion

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q28: The quantity measure in the aggregate demand

Q29: Assuming an economy starts in long-run equilibrium,

Q30: When the economy is creating less output

Q31: If a positive permanent supply shock were

Q32: Higher interest rates cause:<br>A) firms to invest

Q34: A drop in government spending would cause

Q35: When the long-run aggregate supply curve shifts

Q36: In the short run, the aggregate supply

Q37: The figure shown displays various economic outcomes.

Q38: What is the long-run result of government