Answer the following questions, which relate to the aggregate expenditures model: a. If C is £100, I is £50, NX is £-10, and G is £30, what is the economy's equilibrium GDP? Suppose that full-employment (and full-capacity) output in the economy in (a) is £150. Explain the type of gap in this economy and the reasons behind this gap. Clarify the government policies to close this gap.

Answer the following questions, which relate to the aggregate expenditures model: a. If C is £100, I is £50, NX is £-10, and G is £30, what is the economy's equilibrium GDP? Suppose that full-employment (and full-capacity) output in the economy in (a) is £150. Explain the type of gap in this economy and the reasons behind this gap. Clarify the government policies to close this gap.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter9: The Keynesian Model In Action

Section: Chapter Questions

Problem 14SQ

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Answer the following questions, which relate to the aggregate expenditures model:a. If Ca is $100, Ig is $50, Xn is -$10, and G is $30, what is the economy’s equilibrium GDP?b. If real GDP in an economy is currently $200, Ca is $100, Ig is $50, Xn is -$10, and G is $30, will the economy’s real GDP rise, fall, or stay the same?c. Suppose that full-employment (and full-capacity) output in an economy is $200. If Ca is $150, Ig is $50, Xn is -$10, and G is $30, what will be the macroeconomic result?
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