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1. If real GDP is $400 billion, full employment GDP is $800 billion, and the marginal propensity to consume is 0.5, then Congress should decrease taxes by $200 billion. increase taxes by $400 billion. increase purchases by an amount slightly more than $200 billion. increase purchases by $200 billion. increase purchases by $400 billion.

2. If real GDP is $200 billion, full employment GDP is $500 billion, and the marginal propensity to consume is 0.75, then Congress should decrease taxes by $50 billion. increase government purchases by $50 billion. decrease government purchases by $50 billion. decrease taxes by $100 billion. increase government purchases by $300 billion.

3. If real GDP is $400 billion, full employment GDP is $500 billion, and the marginal propensity to consume is 0.5, then Congress should decrease taxes by $50 billion. increase taxes by $100 billion. increase purchases by an amount slightly more than $50 billion. increase purchases by $50 billion. increase purchases by $100 billion.

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