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,…

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A: Change in AE = 8 billion MPC = 0.55

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

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

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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…

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

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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…

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

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Q: If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of $100…

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

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