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The following equations describe an economy: C = 750 + 0.75Y 1 = 350 G = 700 X = 450 IM = 0.1Y T =

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The following equations describe an economy: C = 750 + 0.75Y 1 = 350 G = 700 X = 450 IM = 0.1Y T = 0.2Y If potential output Y' is equal to 4,000. Describe the economy's output gap (a) it has a recessionary output gap. Ob) it does not have an output gap. (c) it has a potential output gap. ( d) it has an inflationary output gap

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