following graph shows the total expenditure line (TE) for an economy where current equilibrium output is $400 billion and potential output is $275 billion. The economy is experiencing _________ (a contractionary gap, an inflationary gap) equal to $______ billion. To close the output gap, government purchases could _______ (increase, decreease) by _____ ($50, 150, 75) billion. Thus, the value of the multiplier for this economy is ___________ (1.6667, 1.4545, 0.6, 0.3125, 0.4545).

Q: MPC = .8, actual GDP = $5,000 and potential GDP = $4,900, there is a __________ (recessionary /…

A: Given  Marginal propensity to consume MPC=0.8 Actual GDP =$5000 Potential GDP = $4900 Potential GDP…

Q: If the MPC in an economy is .8, government could close a recessionary expenditure gap of $200…

A: Answer: Given, MPC (Marginal Propensity to consume) = 0.8 Recessionary Expenditure Gap= $200 To find…

Q: If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of $80…

A: A negative output gap also known as recessionary output gap is when the long run output exceeds the…

Q: Suppose that consumption is 70 million and disposable income is 350 and that the economy is…

A: A recessionary GDP gap refers to when natural GDP is higher than actual GDP. This implies actual GDP…

Q: The table shows real GDP, Y, the components of planned expenditure, and aggregate planned…

A: Computing MPC; Marginal propensity to consume (MPC) is the change in consumption in response to a…

Q: Deriving and exploring the total expenditures curve The following graph shows total production (TP)…

A: Natural Real GDP (NRGDP) or potential GDP refers to the total value of all goods and services that…

Q: If we assume marginal propensity to consume (b) is 80 % and marginal tax rate (t)is 15 %, and…

A: The effect of change in government spending on the national income is the government multiplier.

Q: Assume that a hypothetical economy with an MPC of 0.8 is experiencing a severe recession.…

A: Recession is a period where real GDP is decreasing. This can be rectified by increasing aggregate…

Q: The government estimates that the MPC is 0.80. How much should the government increase spending to…

A: The Marginal propensity to consume is given as 0.80. The anticipated shift in aggregate demand is…

Q: Suppose the government seeks to achieve a balanced budget by levying taxes of $50 billion and making…

A: If MPC=0.8 then  MPS=1-MPC MPS=1-0.8 MPS=0.2

Q: Suppose a closed economy with no government spending which in equilibrium is producing an output and…

A: Given information, Actual output generated: 2250 Marginal propensity to consume: 0.75 Potential…

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: If there is a recessionary gap of $200 Billion and the MPC is .9, how much would government spending…

A: Hi. Since there are two questions, we will solve only the first one. 9. Recessionary gap is given by…

Q: Assume the economy is in a recession and real GDP is below its potential level of output. The MPC is…

A: This can be described as a concept that shows how much part or portion of an additional income…

Q: The fiscal multiplier measures the effect of government spending on a nation's price level. True…

A: The fiscal policy refers to the policy of taxes and expenditures of government. The change in…

Q: Suppose that the MPC is 0.8 and that $18 trillion of real GDP is currently being demanded. The…

A: GDP: It means the monetray value of finished goods and services that are produced in the country.

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: How much government spending needs to be increased by to maintain full employment in the economy If…

A: *Answer:

Q: In a depressed economy with an MPC of 0.20, what effect will a $200 increase in government spending…

A: Consumption is the sum of autonomous consumption and consumption dependent on income. Disposable…

Q: Suppose the economy is in a recession. The economy needs to expand by at least $450 billion, and the…

A: The Marginal Propensity to Consume (MPC) is an economic concept that calculates the change in…

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

A: Aggregate expenditure (AE) is a measure of national income. It is the total amount of spending in…

Q: Expenditures that would exist at a zero level of income are called induced expenditures:  True or…

A: There are two types of expenditure : Induced expenditure and Autonomous expenditure  Induced…

Q: Suppose real GDP is currently $12.5 trillion and potential real GDP is $13 trillion. If the…

A: Aggregate demand is the sum of consumption spending, Investment spending, Government spending  and…

Q: If the MPC .8 and we have a 200B GDP Gap, how much will initial expenditures need to increase to…

A: GDP is the value of final goods and services produced in the economy within a given period of time.

Q: Suppose actual real GDP is $13.74 trillion, potential real GDP is $12.69 trillion, and the marginal…

A: Given  Actual real GDP =$13.74 trillion  Potential GDP =$12.69 trillion. Marginal propensity to…

Q: Suppose the president is successful in passing a $5 billion tax increase. Assume that taxes are…

A: In economics, the concept of a multiplier effect is used to determine how changes in monetary and…

Q: Assume the MPC is 0.80. If government were to impose $200 billion of new taxes on household income,…

A: MPC refers marginal propensity to consume means rise in income of the consumer spend on consumption…

Q: Suppose that the required reserve to deposit ratio is 5%. Assume that people deposit all the cash…

A: Reserve ratio is the ratio of deposit that is kept by the banks.  Multiplier = 1/r  r is the reserve…

Q: Determine the net impact upon the nation's economy that results from equal increases in government…

A: Change in Y = [{1/ (1-MPC)}* change in G] – [{MPC/ (1-MPC)}]* change in T                      =…

Q: Suppose the government is weighing different fiscal policy options, and they would like your help…

A: As given decrease transfer to households by $1000 or decrease government purchases of goods and…

Q: The graph below characterizes a simple economy with only two components of aggregate expenditures:…

A:

Q: The total expenditure schedule in Macroland begins with these initial levels (in billions of…

A:

Q: in another economy, the MPC = 4/5, government needs to increase expenditures $20 to complete a…

A: In this scenario, the marginal propensity to consume (MPC) is 4/5, meaning that for every additional…

Q: Suppose the government raised taxes by $100,000 and simultaneously raised spending by $100,000. If…

A: The multiplier represents the ratio of the change in equilibrium output (GDP) to the initial change…

Q: he multiplier is and the change in eal GDP from the increase in government xpenditures is billion

A: Gross domestic product is a monetary measure of the market value of all the final goods and services…

Q: 5. If an economy has a recessionary expenditure gap, the government could attempt to bring the taxes…

A: Recessionary gap is the gap where economy real GDP is less than Full employment GDP , Government…

Q: Marginal propensity to consume (mpc = c = AC/AY): the change in consumption expendi- ture caused by…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: giving the following information C= 20+4/5Yd T=5+1/5Y I=18 and G=20 find out equilibrium levels of…

A: It is given to us that C=20+4/5yd T=5+1/5Y I = 18 g=20

Q: hi there is another picture as well

A: The 45-degree line in each graph represents all points where aggregate expenditure (AE) equals real…