following graph shows the total expenditure line (TE) for an economy where current equilibrium output is $400 billion and potential output is $275 billion. The economy is experiencing _________ (a contractionary gap, an inflationary gap) equal to $______ billion. To close the output gap, government purchases could _______ (increase, decreease) by _____ ($50, 150, 75) billion. Thus, the value of the multiplier for this economy is ___________ (1.6667, 1.4545, 0.6, 0.3125, 0.4545).

Q: If the MPC in an economy is .8, government could close a recessionary expenditure gap of $200…

A: Answer: Given, MPC (Marginal Propensity to consume) = 0.8 Recessionary Expenditure Gap= $200 To find…

Q: Use the following information on economy X to answer the questions below. Consumption function: C =…

A: please find the calculations below.

Q: If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of $80…

A: A negative output gap also known as recessionary output gap is when the long run output exceeds the…

Q: Explain, using appropriate diagrams, how a rise in the household saving rate can cause a fall in…

A: GDP is the value of final goods and services produced in the country within a given period of time.

Q: Suppose that consumption is 70 million and disposable income is 350 and that the economy is…

A: A recessionary GDP gap refers to when natural GDP is higher than actual GDP. This implies actual GDP…

Q: If the MPC In an economy Is 0.80, government could close a recessionary expenditure gap of $100…

A: Meaning of Money Multiplier: As from the word, the money multiplier refers to the situation under…

Q: An economy is at full employment. Which of the following events can create a recessionary gap? A.An…

A: Recessionary gap :  Anything that decreases the net expenditure line, such as a decrease in demand,…

Q: If consumption is C=100+0.75Yd Taxes is T=50+0.5Y Export is X=200 Import is M=50+0.25Y…

A: The equilibrium is established where: Y= C+I+G+X-M

Q: Suppose the interest on the debt was $700 billion. If interest is paid domestically, 90% will be…

A: Given: The total debt of the country is given as $700 billion  100% interest is paid domestically…

Q: One possible fiscal policy solution for a recessionary gap would be O to cut taxes. O to raise…

A: Fiscal policy is a policy used by the government to stabilize the economy from economic ups and down…

Q: An economy has a fixed price level, no imports and no income taxes.  MPC is 0.75 and real GDP is…

A: Given MPC= 0.75 Real GDP Y =$190 billion  Government expenditure is increased by $5 billion. Price…

Q: Suppose the government seeks to achieve a balanced budget by levying taxes of $50 billion and making…

A: If MPC=0.8 then  MPS=1-MPC MPS=1-0.8 MPS=0.2

Q: Use the following information on economy X to answer the questions below. Consumption function: C =…

A: Given Consumption function: C = 250 + 0.8YInvestment spending: I = 150Government spending: G =…

Q: The following graph shows the planned expenditure line (AE) for an economy where current equilibrium…

A: Equilibrium income = $400 Full employment income = $650

Q: If there is a recessionary gap of $200 Billion and the MPC is .9, how much would government spending…

A: Hi. Since there are two questions, we will solve only the first one. 9. Recessionary gap is given by…

Q: f the current real GDP is P700 billion, which of the following policies would bring the economy to…

A: MPC = 0.8 => Government spending multiplier = 1 / (1-MPC) => Government spending multiplier =…

Q: Use the following information on economy X to answer the questions below. Consumption function: C…

A: Given that,  Consumption function: C = 250 + 0.8Y Investment spending: I = 150 Government spending:…

Q: Assume that, without taxes, the consumption schedule for an economy is as shown in the first two…

A: Please find the attached calculation below-

Q: Chapter 11 shows that increased government purchases, with taxes held constant, can eliminate a…

A: Recessionary Gap: The term recessionary gap refers to the economic situation when the real GDP of…

Q: on basis of the following information. Assume that equilibrium real GDP is $800 billion, potential…

A: Since equilibrium GDP < potential GDP, there is a recessionary gap of (950 - 850) = $150 billion.…

Q: suppose the government wishes to eliminate a recessionary GAP of 100 billion and the  MPC is .75.…

A: Recessionary gap is when the country's GDP is lower than its GDP at full employment level.…

Q: Calculate the net cumulative change in aggregate expenditure if taxes were cut by $200 billion and…

A: Multiplier:Multiplier can be calculated as follows:

Q: Use the following information on economy X to answer the questions below. Consumption function: C =…

A:

Q: An increase in government spending will likely cause which of the following? An increase in the…

A: The macroeconomic equilibrium in an economy is determined by the aggregate demand and aggregate…

Q: Given a full employment level of GDP of 700 Trillion and a current level of 750 Trillion and an MPC…

A: The economy is said to be in the full employment level of GDP at the level of 700 trillion whereas…

Q: Calculate how much output would expand by if the government increased spending by $500 billion and…

A: Here, we see that the change in Government spending, dG=$500 billion, and the change in lump-sum…

Q: If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of $100…

A: ANSWER     The marginal propensity to consumer (MPC) refers to the change in the change in the…

Q: Expenditures that would exist at a zero level of income are called induced expenditures:  True or…

A: There are two types of expenditure : Induced expenditure and Autonomous expenditure  Induced…

Q: Use the following information on economy X to answer the questions below. Consumption function: C=…

A: Given  Consumption function: C = 250 + 0.8Y, Investment spending: I = 150, Government spending G =…

Q: Explain the concept of the spending multiplier.

A: Spending Multiplier = 1/MPS or 1/(1-MPC)Where,MPS = marginal propensity to save that is the…

Q: Suppose the government reduces taxes by 50,000,000, that there is no crowding out, and that marginal…

A: Initially, due to the tax cut of 50,000,000 the spendings of people rose by the MPC (given as 0.9).…

Q: The total expenditure schedule in Macroland begins with these initial levels (in billions of…

A:

Q: You are given the following information about a closed economy with no government: Consumption = 115…

A: Hi, thanks for the question. As per the guidelines we are allowed attempt first three subparts. If…

Q: Please answer the question below: If the current real GDP is P700 billion, which of the following…

A: MPC = 0.8 Potential output = P800 billion Real GDP = P700 billion

Q: The following exercises are based on the Appendix to this chapter. Answer exercises 11-14 on the…

A: (Since you have posted multiple sub-parts, we will answer the first three for you. If you want a…

Q: Equations for C, I, G, and NX are given below. If the equilibrium level of GDP is $32,000, what will…

A: Y= $32000 C= 5000 + (MPC)Y I= 1500 G= 2000 NX= -500 Equilibrium level of output; Y= C+I+G+NX

Q: What is the difference between tax cuts imposed on higher-income households compared with lower- and…

A: The tax cut leads to increases the disposable income of the people. In general, the tax rate is…

Q: If an economy is experiencing an contractionary gap of 260 billion and the expenditure multiplier is…

A: Contractionary gap or recessionary gap refers to the situation where the level of output is less…

Q: In the following table, you are given the following parameters for the economy of Atris: C = 100 +…

A: Given Consumption expenditure C=100+0.85Y Autonomous investment expenditure: I=300 G=150 X=60…

Q: Given the following information, S = -200 + 3Y…

A: S=-200+3Y I=100  Find: a) National Income equilibrium by using the Leakage-Injection b) The value of…

Q: Refer to the table on the next page in answering the questions that follow:a. If full employment in…

A: a) If the full employment is at 130 million of employment, the full-employment GDP is $700 billion.…

Q: In a private closed economy where MPC = 0.90, if consumers reduce their spending by $5 billion and…

A: Given the MPC = 0.90 Reduction in consumption = $5 billion Decrease in investment  = $4 billion

Q: Assume that a three-sector economy in Country W. The amount of autonomous consumption is RM300…

A: (i) The tax imposed is: 0.2Y The consumption function is: C = A + bY     = 300 + 0.5Y

Q: If the MPC in an economy is .8, the increase in real GDP can occur (aggregate demand curve can shift…

A: Multiplier = 1/ [1 - MPC] The required increase in government spending = Total increase in aggregate…