Given the following information about an economy, answer the questions below: C = 55+0.7YD • 1 = 300 • Go = 280 ● NT = 0.2Y Use the multiplier to solve for Y*, and draw an AE-Y graph. ● Draw a BB graph for the economy. After solving for BB, show where the country's equilibrium Y would land on this graph. ● Suppose the economy encountered a recessionary gap. Provide one way the government could use fiscal policy to close this gap and demonstrate this change on both above graphs.

Given the following information about an economy, answer the questions below: C = 55+0.7YD • 1 = 300 • Go = 280 ● NT = 0.2Y Use the multiplier to solve for Y*, and draw an AE-Y graph. ● Draw a BB graph for the economy. After solving for BB, show where the country's equilibrium Y would land on this graph. ● Suppose the economy encountered a recessionary gap. Provide one way the government could use fiscal policy to close this gap and demonstrate this change on both above graphs.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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