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Consider the components of AD for the following economy: (1) consumption=$600 billion; (2) investment=$60 billion; (3) government purchases=$120 billion; and (4) net export= $25 billion.
Consider the components of AD for the following economy: (1) consumption=$600 billion; (2) investment=$60 billion; (3) government purchases=$120 billion; and (4) net export= $25 billion. If the full-employment level of GDP for this economy is $705 billion, then what combination of actions would be the most consistent with the goal of achieving price level stability?
A. Decrease government spending and taxes
B. Increase government spending and decrease taxes
C. Decreae government spenfing and increase taxes
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