1.Assume an economy is currently in equilibrium with real GDP at $716 billion. If potential real GDP (LAS) is $627 billion, which of the following is true?

a)There is an inflationary gap of $89 billion.

b)There is an inflationary gap of 89 percent.

c)There is a recessionary gap of 89 percent.

d)There is a recessionary gap of $89 billion.

What is meant by the term the marginal propensity to expend?

a)Aggregate expenditures as a fraction of income.

b)Autonomous expenditures as a fraction of income.

c)The ratio of change in aggregate expenditures that results from a change in income.

d)The ratio of change in autonomous expenditures that results from a change in income.

which ones are right? multiple choice