Ghassan E.

asked • 01/13/21

Equilibrium GDP is $200 billion. Potential GDP is $100 billion. The PAE = 40 +0.8(GDP). To close the output gap, the government needs to implement a(n)_fiscal policy. The government should_taxes by_.

a. contractionary. increase. $30 billion

b. expansionary. decrease. $30 billion

c. expansionary. increase. $25 billion

d. contractionary. increase. $25 billion

1 Expert Answer

By:

Laura M. answered • 01/13/21

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