14) Suppose real GDP is $12.6 trillion and potential GDP is $12.4 trillion. To move the economy back to potential GDP, Congress should A) lower government purchases by more than $200 billion. B) lower government purchases by $200 billion. C) lower government purchases by an amount less than $200 billion D) lower taxes by $200 billion. E) raise taxes by an amount more than $200 billion.

14) Suppose real GDP is $12.6 trillion and potential GDP is $12.4 trillion. To move the economy back to potential GDP, Congress should A) lower government purchases by more than $200 billion. B) lower government purchases by $200 billion. C) lower government purchases by an amount less than $200 billion D) lower taxes by $200 billion. E) raise taxes by an amount more than $200 billion.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section11.A: Graphical Treatment Of Taxes And Fiscal Policy

Problem 2TY

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Use the following equations for exercises 16–18. C= $100+.8Y I= $200 G= $250 X = $100.2Y
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