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Assume a infinitely elastic short-run aggregate supply. Consider the following economy: C=C + 4 / 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 + 4/10 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 1030, what is the change in autonomous net transfers that will close the output gap?

Round to two decimal places.

Note: You should assume that the mpc for this change in transfers is the same as for all other disposable income.

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