Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Refer to the accompanying table to answerthe questions that follow. (1) Possible Levels of Employment, (Millions) (2) Real Domestic Output, (Billions) (3) Aggregate Expenditures (C

Refer to the accompanying table to answerthe questions that follow.

(1) Possible Levels of Employment, (Millions)

(2) Real Domestic Output, (Billions)

(3) Aggregate Expenditures (C + Ig + G), (Billions)

9 $500 $520
10 550 560
11 600 600
12 650 640
13 700 680

a. If full employment in this economy is 13 million, will there be an inflationary expenditure gap or a recessionary expenditure gap? (Click to select) Inflationary expenditure gap Recessionary expenditure gap What will be the consequence of this gap? (Click to select) 20 million shortfall of employment 20 million excess of employment By how much would aggregate expenditures in column 3 have to change at each level of GDP to eliminate the inflationary expenditure gap or the recessionary expenditure gap? Aggregate expenditures would have to (Click to select) increase decrease by $ billion. What is the multiplier in this example? b. Will there be an inflationary expenditure gap or a recessionary expenditure gap if the full-employment level of output is $500 billion? (Click to select) Inflationary expenditure gap Recessionary expenditure gap By how much would aggregate expenditures in column 3 have to change at each level of GDP to eliminate the gap? Aggregate expenditures would have to (Click to select) increase decrease by $ billion. What is the multiplier in this example? c. Assuming that investment, net exports, and government expenditures do not change with changes in real GDP, what are the sizes of the MPC, the MPS, and the multiplier? Instructions: Round your answers for MPC and MPS below to one decimal place. MPC = MPS = The multiplier =

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Macroeconomics

Authors: Lee Coppock, Dirk Mateer

2nd Edition

0393614093, 9780393614091

More Books

Students also viewed these Economics questions

Question

Where do you see the organization in 5/10 years?

Answered: 1 week ago