Refer to the accompanying table in answering the questions that follow: (1) Possible Levels of Employment, Millions (2) Real Domestic Output, Billions $450 |(3) Aggregate Expenditures (Ca + Ig + Xn + G), Billions 50 $470 80 500 510 110 550 550 140 600 590 170 650 630 Instructions: In parts a-c, enter your answers for the multiplier as a whole number. In part c, round your answers for the MPC and MPS to 1 decimal place. a. If full employment in this economy is 170 million, will there be an inflationary expenditure gap or a recessionary expenditure gap? (Click to select) What will be the consequence of this gap? (Click to select) By how much would aggregate expenditures in column 3 hay to change at each level of GDP to eliminate the gap? Aggregate expenditures would have to (Click to select) ♥ by $ billion. What is the multiplier in this example? b. Will there be an inflationary expenditure gap or a recessionary expenditure gap if the full-employment level of output is $450 billion (Click to select) By how much would aggregate expenditures in column 3 have to change at each level of GDP to eliminate the gap? Aggregate expenditures would have to (Click to select) V by $ billion. What is the multiplier in this example? c. Assuming that investment, net exports, and government expenditures do not change with changes in real GDP, what are the sizes the MPC, the MPS, and the multiplier?
Refer to the accompanying table in answering the questions that follow: (1) Possible Levels of Employment, Millions (2) Real Domestic Output, Billions $450 |(3) Aggregate Expenditures (Ca + Ig + Xn + G), Billions 50 $470 80 500 510 110 550 550 140 600 590 170 650 630 Instructions: In parts a-c, enter your answers for the multiplier as a whole number. In part c, round your answers for the MPC and MPS to 1 decimal place. a. If full employment in this economy is 170 million, will there be an inflationary expenditure gap or a recessionary expenditure gap? (Click to select) What will be the consequence of this gap? (Click to select) By how much would aggregate expenditures in column 3 hay to change at each level of GDP to eliminate the gap? Aggregate expenditures would have to (Click to select) ♥ by $ billion. What is the multiplier in this example? b. Will there be an inflationary expenditure gap or a recessionary expenditure gap if the full-employment level of output is $450 billion (Click to select) By how much would aggregate expenditures in column 3 have to change at each level of GDP to eliminate the gap? Aggregate expenditures would have to (Click to select) V by $ billion. What is the multiplier in this example? c. Assuming that investment, net exports, and government expenditures do not change with changes in real GDP, what are the sizes the MPC, the MPS, and the multiplier?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Refer to the accompanying table in answering the questions that follow:
(1) Possible Levels of
Employment, Millions
(2) Real Domestic
Output, Billions
$450
(3) Aggregate Expenditures (Ca
+ Ig + X, + G), Billions
50
$470
80
500
510
110
550
550
140
600
590
170
650
630
Instructions: In parts a-c, enter your answers for the multiplier as a whole number. In part c, round your answers for the MPC and MPS
to 1 decimal place.
a. If full employment in this economy is 170 million, will there be an inflationary expenditure gap or a recessionary expenditure gap?
(Click to select)
What will be the consequence of this gap?
|(Click to select)
By how much would aggregate expenditures in column 3 have to change at each level of GDP to eliminate the gap?
Aggregate expenditures would have to (Click to select) ♥ by $
billion.
What is the multiplier in this example?
b. Will there be an inflationary expenditure gap or a recessionary expenditure gap if the full-employment level of output is $450 billion?
(Click to select)
By how much would aggregate expenditures in column 3 have to change at each level of GDP to eliminate the gap?
Aggregate expenditures would have to (Click to select) V by $
billion.
What is the multiplier in this example?
c. Assuming that investment, net exports, and government expenditures do not change with changes in real GDP, what are the sizes of
the MPC, the MPS, and the multiplier?
MPC =
MPS =
Multiplier
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