Suppose the council of economic advisors cea hired you as


Suppose the Council of Economic Advisors (CEA) hired you as an Economist (Economic consultant). The head of the council tells that she believes the current unemployment rate of 5.5% is not great. They would like to increase real aggregate output (RGDP). She wants to know what policy to pursue to increase RGDP by $1 trillion ($1,000 billion). The best estimate she gave you is the value of MPC = 0.75. Which of the following policies should you recommend and why? You need to show your work of estimations and explain in words. a. Increase government expenditure (G) by $300 billion b. Reduce taxes by $250 billion c. Reduce taxes by $250 billion and increase govt. expenses by $250 billion d. Increase G by $250 billion

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Business Economics: Suppose the council of economic advisors cea hired you as
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