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Suppose real GDP is 12.1 trillion and potential GDP is 12.6 trillion. TO move the economy back to potential GDP we should raise government purchases
Suppose real GDP is 12.1 trillion and potential GDP is 12.6 trillion. TO move the economy back to potential GDP we should
raise government purchases by less than $500 billion
Can you please explain why this is the answer? Is there a multiplier involved?
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