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First, use the data given in question 1, and assume the level of autonomous investment is $50 billion. If the full-employment level of output is $525 billion, what is the equilibrium level of output and employment? Does a recessionary gap or an inflationary gap exist? Second, assume the level of autonomous investment is $150 billion. What is the equilibrium level of output and employment? Does a recessionary gap or an inflationary gap exist? Explain the consequences of an inflationary gap using the aggregate expenditures model.

BuyFind

Economics For Today

10th Edition
Tucker
Publisher: Cengage Learning
ISBN: 9781337613040
BuyFind

Economics For Today

10th Edition
Tucker
Publisher: Cengage Learning
ISBN: 9781337613040

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Chapter
Section
Chapter 19, Problem 8SQP
Textbook Problem

First, use the data given in question 1, and assume the level of autonomous investment is $50 billion. If the full-employment level of output is $525 billion, what is the equilibrium level of output and employment? Does a recessionary gap or an inflationary gap exist? Second, assume the level of autonomous investment is $150 billion. What is the equilibrium level of output and employment? Does a recessionary gap or an inflationary gap exist? Explain the consequences of an inflationary gap using the aggregate expenditures model.

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