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Congressional budget office reported that potential gdp

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Due to an increase in consumer confidence, consumer spending has increased in the economy. The congressional budget office reported that potential GDP is $500 billion while real GDP is $2,000 billion dollars.

  1. Identify two (2) fiscal policy actions that would correct the problem in the economy. Explain each policy's impact on AD.
  2. If MPC is .75, calculate the amount of the change needed in each of the fiscal policy actions you identified in part A to correct the problem in the economy.

Reference no: EM131750352

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