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Use the aggregate expenditures model to show how government fiscal policy could eliminate either a recessionary expenditure gap or an inflationary expenditure gap. Given

 

Use the aggregate expenditures model to show how government fiscal policy could eliminate either a recessionary expenditure gap or an inflationary expenditure gap. Given that full employment exists at $5,000, does a recessionary gap or inflationary gap exist? Identify this gap in the diagram below. Instructions: 1)Use the snap tool (Gap) to show this expenditure gap. 2) This will display a two-ended arrow. Drag one end of the arrow to the lowest value of the inflationary expenditure gap and drag the other end to the highest value of the gap. Your Graph Score: 0% 8000- Full Employment 7000- 8000- 5000- AE. 4000- 3000--- 2000- 1000- 45 1000 2000 3000 4000 5000 6000 7000 8000 Real GDP Instructions: Enter only a whole number for your answers. What is the dollar amount of this expenditure gap? Aggregate Expenditures (Billions of Dollars)

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