Suppose real GDP is $13 trillion, potential real GDP is $13.5 trillion, and Congress and the president plan to use fiscal policy to restore the economy to potential real GDP
Assuming a constant price level, Congress and the president would need to increase government purchases by
A) less than $500 billion.
B) $500 billion.
C) more than $500 billion.
D) None of the above are correct. Congress must act to decrease government purchases in this case.
A
Economics
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