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1. Use the figure above to answer this
question. What increase in government purchases (G) is
needed to achieve full employment (increase real GDP from
275 to 350)?
1. 10
2. 20
3. 30
4. 50
5. 75
2. Use the figure above to answer this
question. What decrease in taxes (T) is needed to achieve
full employment (increase real GDP from 275 to
350)?
1. 10
2. 20
3. 30
4. 50
5. 75
3. Use the figure above to answer this
question. If we do not want to increase the budget deficit,
what increase in government purchases AND increase in taxes
(BB) would be needed to achieve full employment (increase
real GDP from 275 to 350) ? Increase BOTH G and T
by:
1. 10
2. 20
3. 30
4. 50
5. 75
4. The AD-AS graph shows that as AD
increases there is no increase in the price level (no
inflation). If there was inflation, then what increase in
government spending would be needed to achieve full
employment (increase GDP by $75)?
1. less than $30
2. $30
3. more than $30
4. we cannot tell
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