Multiple Choice
The MPC is 2/3. Real GDP is $500 billion. The natural rate of real GDP is $800 billion. Policymakers choose to follow the aggregate expenditures model to design a tax policy to move the economy to full employment. Taxes should be:
A) decreased by $150 billion.
B) decreased by $100 billion.
C) increased by $150 billion.
D) increased by $100 billion.
Correct Answer:

Verified
Correct Answer:
Verified
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