Answered: If the MPC equals 0.5, and real GDP is…

If the MPC equals 0.5, and real GDP is $14 trillion with potential real GDP $14.5 trillion, how much would government purchases would need to increase by to restore the economy to potential real GDP?

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter8: The Keynesian Model

Section: Chapter Questions

Problem 7SQ

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If the MPC equals 0.5, and real GDP is $14 trillion with potential real GDP $14.5 trillion, how much would government
purchases would need to increase by to restore the economy to potential real GDP?

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