Solved

Suppose That Real GDP Is $1,300, Potential GDP Is $1,800

Question 368

Essay

Suppose that real GDP is $1,300, potential GDP is $1,800, and the marginal propensity to consume is 0.6. If the government is going to close the gap by changing government purchases of goods and services and imposes no taxes, what specific fiscal policy action should policy makers take?

Correct Answer:

verifed

Verified

The marginal propensity to con...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q10: An inflationary gap can be closed with:<br>A)

Q77: Consumer spending will likely rise if:<br>A) government

Q363: If the marginal propensity to save is

Q365: When the unemployment rate decreases, the budget:<br>A)will

Q366: The automatic stabilizer in government tax revenue

Q367: Spending promises made by the government that

Q369: The promise to pay Social Security benefits

Q370: Use the following to answer questions:<br>Figure: Short-Run

Q371: A $100 million increase in government spending

Q373: An increase in government spending of $300