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Suppose that real GDP is currently $20.7 trillion and potential real...

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Accounting

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Suppose that real GDP is currently $20.7 trillion and potential real GDP is $21.4 trillion, or a gap of $700 billion. The government purchases multiplier is 10.0, the tax multiplier is 9.0, and the transfers multiplier is 9.0. Holding other factors constant, by how much will government purchases need to be increased to bring the economy to equilibrium at potential GDP? Government spending will need to be increased by $ billion. (Enter your response rounded to the nearest whole number.)

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