Consider the diagram below, in which the current short-run equilibrium is at point A, and answer the

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Consider the diagram below, in which the current short-run equilibrium is at point A, and answer the questions that follow.

a. What type of gap exists at point A?
b. If the marginal propensity to save equals 0.20, what change in government spending financed by borrowing from the private sector could eliminate the gap identified in part (a)? Explain.

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Economics Today The Macro View

ISBN: 9780134478760

19th Edition

Authors: Roger LeRoy Miller

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Question Posted: Jun 23, 2017 08:35 AM

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Consider the diagram below, in which the current short-run equilibrium is at point A, and answer the

Question:

LRAS SRAS 120- 115 AD 18.0 18.5 19.0 Real GDP per Year (S trillions)

Step by Step Answer:

a There is a recessionary gap because at point A equilibrium real ...View the full answer

Economics Today The Macro View

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