Multiple Choice
If the absolute value of the tax multiplier equals 1.5, real GDP is $13 trillion, and potential GDP is $13.6 trillion, then taxes would need to be cut by ________ to restore the economy to potential GDP.
A) $400 billion
B) $450 billion
C) $600 billion
D) None of these options is correct. Taxes should be increased in this case.
Correct Answer:
Verified
Correct Answer:
Verified
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