Suppose Real GDP Is $1

Multiple Choice

Suppose real GDP is $1.4 trillion and potential GDP is $1.9 trillion.To move the economy back to potential GDP, the federal government should

A) lower taxes by an amount less than $500 billion.
B) raise government purchases by $500 billion.
C) raise government purchases by more than $500 billion.
D) lower taxes by $500 billion.
E) lower government purchases by $500 billion.