Assume That an Economy's Real GDP Multiplier Is 2 and That

Multiple Choice

Assume that an economy's real GDP multiplier is 2 and that this economy is in equilibrium at $500 billion. If the government wants to move this economy to full-employment at $600 billion, while maintaining a balanced budget, it must choose which of the following options?

A) Increase government spending and taxes by $100 billion
B) Decrease government spending and taxes by $100 billion
C) Increase government spending and taxes by $200 billion
D) Decrease government spending and taxes by $200 billion