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You are told that an economy's full-employment level of real output is $800billion while its equilibrium level is $600billion and the AD shortfall is $400
You are told that an economy's full-employment level of real output is $800billion while its equilibrium level is $600billion and the AD shortfall is $400 billion.You are also told that the mpcis 0.6. If the government wantsto eliminate the gap by means of an EQUAL change in G and T (taxes), it should
A.decrease both G and T by $400billion.
B.increase G by $200 billion and increase T by $200billion.
C.increase both G and T by $400 billion.
D.decrease G by $200 billion and increase T by $400 billion.
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