Assume that full-employment real GDP is Y = $1,200 billion, the current equilibrium real GDP is Y = $1,600 billion, and the MPC = 0.8. To bring the economy to a full-employment real GDP, a. a recessionary gap must be bridged by increasing aggregate expenditures by $80 billion. b. an inflationary gap must be bridged by cutting aggregate expenditures by $80 billion. c. nothing is needed to bring the economy into full-employment equilibrium. d. a recessionary gap must be bridged by increasing aggregate expenditures by $400 billion. e. an inflationary gap must be bridged by cutting aggregate expenditures by $400 billion.

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MACROECONOMICS FOR TODAY

10th Edition
Tucker
Publisher: CENGAGE L
ISBN: 9781337613057
BuyFind

MACROECONOMICS FOR TODAY

10th Edition
Tucker
Publisher: CENGAGE L
ISBN: 9781337613057

Solutions

Chapter
Section
Chapter 9, Problem 15SQ
Textbook Problem

Assume that full-employment real GDP is Y = $1,200 billion, the current equilibrium real GDP is Y = $1,600 billion, and the MPC = 0.8. To bring the economy to a full-employment real GDP,

  1. a. a recessionary gap must be bridged by increasing aggregate expenditures by $80 billion.
  2. b. an inflationary gap must be bridged by cutting aggregate expenditures by $80 billion.
  3. c. nothing is needed to bring the economy into full-employment equilibrium.
  4. d. a recessionary gap must be bridged by increasing aggregate expenditures by $400 billion.
  5. e. an inflationary gap must be bridged by cutting aggregate expenditures by $400 billion.

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Chapter 9 Solutions

MACROECONOMICS FOR TODAY

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