Assume an economy is currently in equilibrium with Real GDP at $716 bllion. If potential Real GOP AS n $627 tllion, wich of the following is true? Multiple Choice There is an inflationary gep of $89 billion. There is an inflotionary gap of 89 percent There is a recessionary gap of 89 percent. There is a recessionary gap of $89 billion.

Assume an economy is currently in equilibrium with Real GDP at $716 bllion. If potential Real GOP AS n $627 tllion, wich of the following is true? Multiple Choice There is an inflationary gep of $89 billion. There is an inflotionary gap of 89 percent There is a recessionary gap of 89 percent. There is a recessionary gap of $89 billion.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 4TY

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Exercise D24 Compare two policies: a tax cut on income or an increase in government spending on roads and bridges. What are both the short-term and longâ€”term impacts of such policies on the economy?
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Give typed solution only assume an economy has an MPC of .5 and their full employment level of output is $500 billion. If their current GDP is $600 billion, what could their government do to try ans correct this? a) decrease taxes by $50 billion b) decrease government spending by $50 billion c) increase government spending by $50 billion d) increase taxes by $50 billion
Imagine there is a consumption smoother (also known as a PIH consumer) who expectsto live for another 40 years and to work for another 30 years. They just learned thatthey will receive a permanent pay increase from their job of $800. How much extra dothey consume this year? What is their marginal propensity to consume?
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Assume: Y= C + I + G + NX C = 400 + (0.8)YD Io = 200 G = 300 + (0.1)(Y* - Y) YD = Y - TA + TR NXo = - 40 TA = (0.25)Y TRo = 50 How do I calculate the multiplier? Thank you.
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