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Suppose the council of economic advisors
Course:- Business Economics
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Suppose the Council of Economic Advisors (CEA) hired you as an Economist (Economic consultant). The head of the council tells that she believes the current unemployment rate of 9 % is too high. They would like to increase real aggregate output (RGDP) . She wants to know what policy to pursue to increase RGDP by $2 trillion ($2,000 billion) . The best estimate she ga ve you is the value of MPC = 0.8 . Which of the following policies should you recommend and why? You need to show your work of estimations and explain in words. 4 pts a. Increase government expenditure (G) by $400 billion b. Reduce taxes by $400 billion c. Reduce taxes by $400 billion an d increase govt. expenses by $200 billion d. Increase G by $5 00 billion




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