Hi, I want to make sure I did these problems correctly.

4)Given the following macroeconomic data for a hypothetical economy:

C = 150 + 0.8 (DI)

I = 75

G = 30

X = 40

M = 50

T = 150

Compute the level of equilibrium real GDP level for this economy.

In equilibrium, Real GDP = C + I + G + (X - M)

DI = Y - T

Y = 150 + 0.8(Y - 150) + 75 + 30 + (40 - 50)

Y = 150 + 95 + 0.8(Y - 150)

Y = 245 + 0.8Y - 120

Y = 125 + 0.8Y

Y - 0.8Y = 125

0.2Y = 125

0.2Y/0.2 = 125/0.2

Y = $625

5) Using the information in #4 above and assuming that the economy's full-employment level of real GDP is $900, is the economy experiencing a recessionary or inflationary gap? Be sure to justify your answer correctly for full credits to be given.

The economy is experiencing a recessionary gap since the real GDP is less than full employment GDP. Actual GDP is $625. Full employment is $900. Therefore, the economy is not operating at full employment.

Recessionary Gap = Full Employment - Actual GDP

Recessionary Gap = 900 - 625

Recessionary Gap = $275

6)Using the information in #5 above. Determine the amount of government spending needed to bring the economy's real GDP to the full-employment level.

Change in real GDP = Change in Government Spending x Spending Multiplier

Spending Multiplier = 1 / 1 - MPC

Spending Multiplier = 1/1 - 0.8

Spending Multiplier = 1 / 0.2

Spending Multiplier = 5

Change in Real GDP = 275

275 = Change in Government Spending x (1 /1-0.8)

Required Change in Government Spending = 275 / 5

Required Change in Government Spending = $55

Government spending should be increased by $55 to close recessionary gap.

7)Using the information in #5 above. Determine the amount of taxes necessary to bring the economy's real GDP to the full-employment level.

Change in real GDP = Change in Taxes x Spending Multiplier

Spending Multiplier = -MPC/1-MPC

Spending Multiplier = -0.8 / 0.2

Spending Multiplier = -4

Required Change in Taxes = Required Change in Real GDP / Tax Multiplier

275 = Change in Taxes x (-0.8 / 0.2)

Change in Taxes = 275 / (-4)

Change in taxes = -68.75

In order to close the recessionary gap, taxes should be decreased by $68.75