Question
Country X's long run potential full employment level of Real GDP is estimated to be $21,300,000. However, the current actual Real GDP in country
Country X's long run potential full employment level of Real GDP is estimated to be $21,300,000. However, the current actual Real GDP in country X stands at $19,000,000. Additional data on spending habits shows consumers in country X consume $0.90 out of every additional $1 income they receive. Answer the following questions based on the above information. 1. Is Country X in a recessionary or an inflationary gap? Briefly explain your answer. II. What is the dollar value of the GDP gap? III. Calculate country X's Marginal Propensity to Consume (MPC), and Marginal Propensity to Save (MPS)?
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I Recessionary or Inflationary Gap Country X is in a recessionary gap This conclusion is drawn from ...Get Instant Access to Expert-Tailored Solutions
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Entrepreneurial Finance
Authors: J. Chris Leach, Ronald W. Melicher
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1305968352, 978-1337635653, 978-1305968356
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