The following graph C+G+X represents a partial Keynesian economy ($ trillion).

If in this economy I=1.0, answer the following questions:

What is the equilibrium GDP (GDPe)

4

5

6

8

The expenditure multiplier is

2.5

3.0

1.5

2.0

If full employment GDP (GDPf) = 5 what type of gap is the economy experiencing?

recessionary

stationary

inflationary

Alberta Advantage

To eliminate the gap above, government expenditures (G) must

decrease by 1.0

decrease by 0.5

increase by 0.5

increase by 1.0