Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following macroeconomic data are from country D's economy. Dollar values are measured in billions dollars. Consumption $300 Investments $75 Exports $35 Imports $40 Government

image text in transcribed
The following macroeconomic data are from country D's economy. Dollar values are measured in billions dollars. Consumption $300 Investments $75 Exports $35 Imports $40 Government spending $50 Taxes $20 Potential real output $500 A. Calculate the current level of GDP. Is the economy facing a recessionary gap, an inflationary gap, or neither? Explain using numbers. B. Based on your answer to part (a), how will the economy adjust in the long run in the absence of any government policy action? Explain. C. Now assume the economy is in long-run equilibrium. I. Assume autonomous consumption spending increases by $10 billion and the marginal propensity to save is 0.2. Calculate the maximum possible change in real output. Show your work

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

Step: 3

blur-text-image

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

Local Disaster Resilience Administrative And Political Perspectives

Authors: Ellen Russell, Ashley D Ross

1st Edition

1135910618, 9781135910617

More Books

Students also viewed these Economics questions

Question

Describe two of Georg Elias Mllers contributions to psychology.

Answered: 1 week ago