Assume that an economy's real GDP multiplier is 2 and that this economy is in equilibrium at $500 billion. If the government wants to move this economy to full-employment at $600 billion, while maintaining a balanced budget, it must choose which of the following options?
a. Increase government spending and taxes by $100 billion
b. Decrease government spending and taxes by $100 billion
c. Increase government spending and taxes by $200 billion
d. Decrease government spending and taxes by $200 billion
a
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Why do airlines often charge students and vacationers a lower price than business travelers?
a. It is cheaper to provide airline service to students and vacationers than to business travelers. b. The demand of business travelers is generally more elastic than the demand of students and vacationers. c. The demand of students and vacationers is generally more elastic than the demand of business travelers. d. Airlines prefer to deal with students and vacationers rather than business travelers.
Stimulus spending in 2009 was used for
a. building roads and bridges. b. providing aid to local and state governments. c. making payments to the unemployed. d. All of the above are correct.