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If the government purchases multiplier equals 2, and real GDP is $14 trillion with potential GDP $14.5 trillion, then government purchases would need to increase by 16. to restore the economy to potential GDP. A) $7.25 trillion B) $1 trillion $500 billion $250 billion D) E) None of the above.

If the government purchases multiplier equals 2, and real GDP is $14 trillion with potential GDP $14.5 trillion, then government purchases would need to increase by 16. to restore the economy to potential GDP. A) $7.25 trillion B) $1 trillion $500 billion $250 billion D) E) None of the above.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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If the government purchases multiplier equals 2, and real GDP is $14 trillion with potential GDP $14.5 trillion, then government purchases would need to increase by 16. to restore the economy to potential GDP. A) $7.25 trillion B) $1 trillion C) $500 billion D) $250 billion None of the above.
Transcribed Image Text:If the government purchases multiplier equals 2, and real GDP is $14 trillion with potential GDP $14.5 trillion, then government purchases would need to increase by 16. to restore the economy to potential GDP. A) $7.25 trillion B) $1 trillion C) $500 billion D) $250 billion None of the above.
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