In a certain year the aggregate amount demanded at the existing price level consists of $100 billion of consumption, $40 billion of investment, $10 billion of net exports, and $20 billion of government purchases. Full-employment GDP is $200 billion. To obtain full employment under these conditions the government should: encourage personal saving by increasing the interest rate on government bonds. decrease government expenditures. reduce tax rates and/or increase government spending. discourage private investment by increasing corporate income taxes

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A: please find the calculations below.

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Q: wages = 700 goverment spending = 2,300 investment = 2,300 rent = 200 consuption = 7,400 net exports…

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