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. In order to bring the economy to a full-employment real GDP:   Group of answer choices a recessionary gap must be bridged by increasing aggregate expenditures by $80 billion. an inflationary gap must be bridged by cutting aggregate expenditures by $80 billion. nothing is needed to bring the economy into full employment equilibrium. a recessionary gap must be bridged by increasing aggregate expenditures by $400 billion. an inflationary gap must be bridged by cutting aggregate expenditures by $400 billion.

Q: How much would the government have to change spending to close the gap?

A: There is multiplier effect occur in the economy so there is no need to send the same amount of…

Q: Assume the economy is currently experiencing a 100 billion-dollar recessionary gap. Furthermore,…

A: For finding the change in taxes, tax multiplier needs to be determined.  Tax multiplier= MPC/(1-MPC)…

Q: Suppose the marginal propensity to consume (MPC) is either 0.75, 0.96, or 0.62.   a. For each…

A: GDP shows total market value that produced within a country in a specific time period .GDP is used…

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A: Change in AE = 8 billion MPC = 0.55

Q: It is found that the consumption function for the economy is C = 50 + 0.8 Y d . Current level of…

A:

Q: a ressionary gap look like on a graph and how does recessionary gap connect with current economic…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Given the following: C = 150 + 0.25Y4 = 150 + 0.25(Y – T) I = 300 G = 450 T = 250 Solve for the…

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Q: In the Keynesian model, the effect on equilibrium aggregate expenditure and output of an increase in…

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Q: It is assumed that everything else stays constant.  The economy has Consumption $90, Investment…

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Q: If unplanned change in inventory is zero    aggregate output is positive when planned aggregate…

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Q: Illustrate the impact of a $500 million increase in government spending by adjusting the graph. In…

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Q: Assume that the full-employment level of output is $500, and the price level associated with…

A: The term "marginal propensity to consume" (MPC) describes the shift in consumption that results from…

Q: Consider an economy described by the following set of equations: c = 120 +0.08Y I = 320 G = 480 X-IM…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: The value of consumption at the equilibrium le of output and income is? Aggregate spending at full…

A: A recessionary gap corresponds to a positive GDP gap where actual GDP is less than potential, while…

Q: Assume the current equilibrium level of income is $200 billion as compared to the full-employment…

A: The objective of the question is to find out the change in aggregate expenditures needed to achieve…

Q: Given that autonomous spending is 100 billion, disposible income is 20 billion, and marginal…

A: C = a + bY Where C= Consumption expenditure in aggregate             a= Autonomous consumption…

Q: A recessionary gap is how much GDP needs to increase from the current GDP to achieve full…

A: Recessionary gap: In general, a recessionary deficit is a disparity between real and future demand…

Q: Use the point drawing tool to plot and label the equilibrium level of income. Carefully follow the…

A: Aggregate expenditure function is derived  from summation of the consumption expenditure, investment…

Q: If the marginal propensity to consume (MPC) = 0.80 and for every $10 change in G, I decreases by $4.…

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Q: Suppose that current income (Y) is 200,000, income in the previous period (Yt-1) is 170,000,…

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Q: In Keynesian economic theory, a recessionary gap causes a depletion of inventories. occurs if total…

A: An economy is at full employment when rate of actual spending is equal to full employment GDP.

Q: Explain the effect of an increase in exports on the equilibrium GDP in the Keynesian…

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Q: Assume taxes are zero and an economy has a consumption function of C = 0.59 (Yd) + $213.05.  What is…

A: When there are no savings, the income reaches the break-even level. We are aware that savings plus…

Q: Consider an economy with the following consumption function: C = 400 + 0.60YD, and investment…

A: Consumption function: C=400+0.60YD      .... (1) I=600 Marginal propensity to consume increases by…

Q: Assume that initial GDP is $1,000 and we want to expand it to $1,600. Average MPC for the country is…

A: Economists use the marginal propensity to save (MPS) to measure the link between income and savings.…

Q: You are given the following data concerning Freedonia, a legendary country: • Consumption function:…

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Q: An economy is operating with an output that is $600 billion dollars above its natural rate of $2400…

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Q: Country X's long run full employment level of Real GDP is estimated to be $22,900,000. However, the…

A: “Since you have posted multiple questions with multiple sub parts, we will provide the solution only…

Q: Suppose Kittyville's full-employment GDP is $600 billion, and the current equilibrium GDP is $400…

A: Full employment GDP is the potential output that an economy will produce with efficient utilization…

Q: he marginal propensity to consume (mpc) is 0.8. In addition, government spending increases by $200…

A: The marginal propensity to consume is 0.8=> MPC =…

Q: A rise in interest rate.

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Q: As you know equilibrium occurs where Y = AE. That is, where aggregate output equals planned…

A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: If an increase in aggregate expenditures results in no increase in real GDP we can surmise that the:…

A: Real Gross Domestic Product (GDP) is a measure of the value of all goods and services produced…

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: d) What is the value of unplanned changes in the inventory investment when real GDP is $4000? e)…

A: Their autonomous consumption is $700, and the marginal propensity to consume is 0.8, and Net taxes…

Q: Suppose the aggregate expenditure (AE) schedule in an economy is given by the equation AE = 1,000 +…

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Q: The country is experiencing a serious rise in inflation which the government wants to control…

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Q: True or false: The slope of the consumption function is the marginal propensity to consume (MPC).…

A:

Q: Suppose actual real GDP is $13.37 trillion, potential real GDP is $12.33 trillion, and the marginal…

A: The worldwide economy and commerce across borders have an immense impact on the financial…