onsider the economy described by the following equations: C = 1,600 + 0.9 (Y – T) I p = 800 G = 1,600 NX = 200 T = 1,600 Y* = 29,000 a. Complete the table shown below to find short-run equilibrium output. Consider possible values for short-run equilibrium output as they are given in the table below. Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. OutputY Planned aggregate expenditure (PAE) Y – PAE Y = PAE? 27,200 (Click to select) Yes No 27,400 (Click to select) No Yes 27,600 (Click to select) No Yes 27,800 (Click to select) No Yes 28,000 (Click to select) No Yes b. Short-run level of equilibrium output: c. What is the output gap for this economy?
| C | = 1,600 + 0.9 (Y – T) |
| I p | = 800 |
| G | = 1,600 |
| NX | = 200 |
| T | = 1,600 |
| Y* | = 29,000 |
a. Complete the table shown below to find short-run equilibrium output. Consider possible values for short-run equilibrium output as they are given in the table below.
Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.
| OutputY | Planned aggregate expenditure (PAE) | Y – PAE | Y = PAE? |
| 27,200 | (Click to select) Yes No | ||
| 27,400 | (Click to select) No Yes | ||
| 27,600 | (Click to select) No Yes | ||
| 27,800 | (Click to select) No Yes | ||
| 28,000 | (Click to select) No Yes |
b. Short-run level of equilibrium output:
c. What is the output gap for this economy?
Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. The actual
Output gap: where Y* = 29,000
If the natural rate of unemployment is 5 percent, what is the actual unemployment rate for this economy (use Okun’s law given Y* = 29,000).
Actual unemployment rate %
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