Suppose real GDP is $1.7 trillion, potential real GDP is $1.8 trillion, and the federal government plans to use fiscal policy to restore the economy to potential real GDP. Assuming a constant price level, the federal government would need to increase government purchases by more than $100 billion. O None of the above is correct. The federal government must decrease government purchases in this case. O $100 billion. O less than $100 billion.
Suppose real GDP is $1.7 trillion, potential real GDP is $1.8 trillion, and the federal government plans to use fiscal policy to restore the economy to potential real GDP. Assuming a constant price level, the federal government would need to increase government purchases by more than $100 billion. O None of the above is correct. The federal government must decrease government purchases in this case. O $100 billion. O less than $100 billion.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Suppose real GDP is $1.7 trillion, potential real GDP is $1.8 trillion, and the federal
government plans to use fiscal policy to restore the economy to potential real GDP.
Assuming a constant price level, the federal government would need to increase
government purchases by
more than $100 billion.
O None of the above is correct. The federal government must decrease
government purchases in this case.
O $100 billion.
O less than $100 billion.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc2b8283e-337c-4e6b-8ac6-c9eb2862cd9c%2F18bba3e9-4e96-471d-9fa6-d16685c9e6c3%2Fdxprg1s_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose real GDP is $1.7 trillion, potential real GDP is $1.8 trillion, and the federal
government plans to use fiscal policy to restore the economy to potential real GDP.
Assuming a constant price level, the federal government would need to increase
government purchases by
more than $100 billion.
O None of the above is correct. The federal government must decrease
government purchases in this case.
O $100 billion.
O less than $100 billion.
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