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Suppose Real GDP Is $14 Trillion and Potential Real GDP

Question 306

Multiple Choice

Suppose real GDP is $14 trillion and potential real GDP is $14.4 trillion.An increase in government purchases of $400 billion would cause real GDP to ________ potential real GDP (assuming a constant price level) .


A) equal
B) be less than
C) be more than
D) There is insufficient information given here to draw a conclusion.

Correct Answer:

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