Assume that marginal propensity to consume is 0.8 and potential output is $800 billion. If the actual real GDP is $700 billion, government spending by would bring the economy to potential output.

Assume that marginal propensity to consume is 0.8 and potential output is $800 billion. If the actual real GDP is $700 billion, increase government spending by $20 billion would bring the economy to potential output.

Explanation:

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answerindustrial revolution;