1. Real GDP= $24 trillion

Potential GDP= $30 trillion

Marginal Propensity to consume=.8

Based on the data, answer the following:

Calculate how much spending is necessary to close the recessionary gap (Hint: you will need to calculate the multiplier.)

2. Which graph best illustrates the effect of the following on the supply or demand of cars sold

Insurance premiums increase. ___

More freeways are built that reduce traffic congestion. ___

Gasoline prices rise. ___

Public transportation becomes expensive. ___

There is a shortage of tires. ___

P P D1 S S D1 Dz S D1 S D2 0 Q (8) (A) P P Sz D D S2 51 D D S SZ 0 Q 0 Q (C) (D)