The economy at full-employment equilibrium

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Suppose the short-run equilibrium level of real GDP is $4,000 billion and the MPC = 0.75. If full employment (natural) real GDP is $5,000 billion, what fiscal policy action could the government undertake to put the economy at full-employment equilibrium, according to the simple Keynesian model? Increase government spending by $250 billion or decrease taxes by $333.3 billion Increase both government spending and taxes by $333.3 billion Decrease taxes by $250 billion or increase government spending by $200 billion Decrease government spending by $250 billion or increase taxes by $333.3 billion

Reference no: EM131171159

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