Suppose real GDP is $12.1 trillion and potential GDP is $12.6 trillion. To move the economy back to potential GDP, Congress should
A) lower government purchases by $500 billion.
B) raise government purchases by $500 billion.
C) raise government purchases by more than $500 billion.
D) lower taxes by an amount less than $500 billion.
E) lower taxes by $500 billion.
D
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The natural rate of unemployment (i) is the economy's desirable level of unemployment. (ii) arises from a single problem that has a single solution. (iii) is the amount of unemployment that does not go away on its own
a. (i) and (ii) only b. (iii) only c. (i), (ii), and (iii) d. None of the above is correct.
A change in expected inflation shifts
a. the short-run Phillips curve, but not the long run Phillips curve. b. the long-run Phillips curve, but not the long run Phillips curve. c. neither the short-run nor the long-run Phillips curve. d. both the short-run and long-run Phillips curve right.