Question
Assume a infinitely elastic short-run aggregate supply. Consider the following economy: C=C + 8 / 10 x Y D I=I TR=TR G=G T= 1 /
Assume a infinitely elastic short-run aggregate supply. Consider the following economy:
- C=C + 8/10 x YD
- I=I
- TR=TR
- G=G
- T=1/2 x Y
- X=0
- M=0
Potential GDP is 1000, while current GDP is 930. Assuming the mpc on changes in transfers is 1, what is the change in autonomous net transfers that will close the output gap?
Round to two decimal places.
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Intermediate Microeconomics
Authors: Hal R. Varian
8th edition
393934241, 978-0393934243
