Vou are told that an economy's full-employment level of real output is $800 billion while its equilibrium level is S600 billion and the AD shortfall is $400 billion. You are also told that the mpc is 0.6. If the government wants to eliminate the gap by mnans of an EQUAL change in G and T (taxes). It should OA decrease both G and T by $400 billion. OR. Intrease both G and T by $400 billion. oc decrease both G and T by $200 billion. Op increase both G and T by $200 billion,

Vou are told that an economy's full-employment level of real output is $800 billion while its equilibrium level is S600 billion and the AD shortfall is $400 billion. You are also told that the mpc is 0.6. If the government wants to eliminate the gap by mnans of an EQUAL change in G and T (taxes). It should OA decrease both G and T by $400 billion. OR. Intrease both G and T by $400 billion. oc decrease both G and T by $200 billion. Op increase both G and T by $200 billion,

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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