Let's say that our country's Gross Domestic Product is at $15 billion (this year). We also know that we currently have unemployment and that we would have full employment if our Gross Domestic Product were to reach $18.5 billion. If the Keynesian multiplier is 7, then what would Keynesian economists recommend regarding changes in government spending and taxation?
- We need to decrease government spending by $.4 billion.
- We need to decrease taxes by $.4 billion.
- We need to increase government spending by $.4 billion.
- We need to increase government spending by $.5 billion.
- We need to decrease government spending by $2 billion.