Suppose that real GDP is currently $1.36 trillion, potential GDP is $1.42 trillion, the government purchases multiplier is 3 and the tax multiplier is 2.4.

a. Holding other factorsconstant, government purchases will need to be increased by $_____ trillion to bring the economy to equilibrium at potential GDP. (Round to four decimal places asneeded.)

b. Holding other factorsconstant, taxes have to be cut by $_____ trillion to bring the economy to equilibrium at potential GDP.

(Round to four decimal places asneeded.)

c. Construct an example of a combination of increased government spending and tax cuts that will bring the economy to equilibrium at potential GDP.

The combination of increasing government spending by 0.1440, 0.1800, 0.0600, 0.0080 and cutting taxes by $_______ trillion will bring the economy to equilibrium at potential GDP.

(Round to four decimal places asneeded.)