Problem
Suppose that real GDP is currently $17.1 trillion, potential GDP is $17.4 trillion, the government purchases multiplier is 2, and the tax multiplier is -1.6.
• Holding other factors constant, by how much will government purchases need to be increased to bring the economy to equilibrium at potential GDP?
• Holding other factors constant, by how much will taxes need to be cut to bring the economy to equilibrium at potential GDP?
• What is an example of a combination of increase in government purchases and tax cuts that would have the desired effect of bringing the economy to equilibrium at potential GDP?
Can you answer asap need before 1145 thanks!!!
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.