Assume That Full-Employment Real GDP Is Y = $1,200 Billion

Multiple Choice

Assume that full-employment real GDP is Y = $1,200 billion, the current equilibrium real GDP is Y = $1,600 billion, and the MPC = 0.8. In order to bring the economy to a full-employment real GDP,

A) a recessionary gap must be bridged by increasing aggregate expenditures by $80 billion.
B) an inflationary gap must be bridged by cutting aggregate expenditures by $80 billion.
C) nothing is needed to bring the economy into full employment equilibrium.
D) a recessionary gap must be bridged by increasing aggregate expenditures by $400 billion.
E) an inflationary gap must be bridged by cutting aggregate expenditures by $400 billion.