Author Question: The GDP gap is the difference between: a. full-employment real GDP and real GDP chain price index. ... (Read 70 times)

DelorasTo · **on:** Jun 30, 2018

The GDP gap is the difference between:
a. full-employment real GDP and real GDP chain price index.
b. unemployment rate and real GDP chain price index.
c. actual real GDP and full-employment real GDP.
d. frictional unemployment and actual real GDP.

Question 2

If no fiscal policy changes are made, suppose the current aggregate demand curve will increase horizontally by 1,000 billion and cause inflation. If the marginal propensity to consume is 0.75, federal policymakers could follow Keynesian economics and restrain inflation by decreasing:
a. government spending by 250 billion.
b. taxes by 100 billion.
c. taxes by 1,000 billion.
d. government spending by 1,000 billion.