Suppose the economy is in a recession. The output gap is negative $1 trillion. The AE function reads AE = 0.5 + 0.8Y. By how much should the government change its spending to bring the economy to its full potential? Answer in trillions USD up to two decimal points, for example if the answer is $100 billion you should type 0.10

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Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?
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Suppose the economy is in a recession. The output gap is negative $1 trillion. The AE function reads AE = 0.5 +0.8Y. By
how much should the government change its spending to bring the economy to its full potential? Answer in trillions USD
up to two decimal points, for example if the answer is $100 billion you should type 0.10
Transcribed Image Text:Question 25 0.2 Hide Correct Answer Show Responses Suppose the economy is in a recession. The output gap is negative $1 trillion. The AE function reads AE = 0.5 +0.8Y. By how much should the government change its spending to bring the economy to its full potential? Answer in trillions USD up to two decimal points, for example if the answer is $100 billion you should type 0.10
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