If the government purchases multiplier equals 2, and real GDP is $14 trillion with potential GDP $15 trillion, then government purchases would need to increase by ________ to restore the economy to potential GDP.

Assume the corresponding multiplier values: government purchases multiplier (2) and tax multiplier (-1.6). Suppose the current equilibrium GDP is $13.5 trillion and the potential GDP is $14.3 trillion. To return to potential GDP, what is the necessary change in government purchases? Government purchases decrease by $800 billion. Government purchases increase by $800 billion. Government purchases decrease by $125 billion. Government purchases increase by $400 billion. Government purchases increase by $500 billion.

The government invests $1.2 trillion in infrastructure, restoring GDP from $10 trillion to its potential level of $12.5 trillion. What is the value of the government purchases multiplier? 1.2 2.08 2 2.5 0.48

If the marginal propensity to save is 0.2 and the government decreases its purchases by $20 billion, then real GDP willDecrease by $100 billion.Increase by $100 billion.Decrease by $25 billion.Increase by $25 billion.

The government increases unemployment benefits by $1 million and funds it entirely by raising taxes. The absolute value of the government purchases multiplier is 3, that of the tax multiplier is 2 and that of the transfer payment multiplier is also 2. What is the impact on GDP? GDP increases by $1 million GDP decreases by $1 million GDP increases by $3 million GDP does not change GDP decreases by $3 million

If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657, investment is $741, and net exports are –$1,910, then government purchases are: