that follow: L011.8 (1) (2) (3) Aggregate Expenditures (C, +1,+X, + G), Millions Possible Levels Real Domestic of Employment, Output, Millions Millions 90 $500 $520 100 550 560 110 600 600 120 650 640 130 700 680 a. If full employment in this economy is 130 million, will there be an inflationary expenditure gap or a recessionary expenditure gap? What will be the consequence of this gap? By how much would aggregate expenditures in column 3 have to change at each level of GDP to eliminate the inflationary expenditure gap or the recessionary expenditure gap? What is the multiplier in this example? b. Will there be an inflationary expenditure gap or a recessionary expenditure gan if the full-emplovment level of outnut is S500
that follow: L011.8 (1) (2) (3) Aggregate Expenditures (C, +1,+X, + G), Millions Possible Levels Real Domestic of Employment, Output, Millions Millions 90 $500 $520 100 550 560 110 600 600 120 650 640 130 700 680 a. If full employment in this economy is 130 million, will there be an inflationary expenditure gap or a recessionary expenditure gap? What will be the consequence of this gap? By how much would aggregate expenditures in column 3 have to change at each level of GDP to eliminate the inflationary expenditure gap or the recessionary expenditure gap? What is the multiplier in this example? b. Will there be an inflationary expenditure gap or a recessionary expenditure gan if the full-emplovment level of outnut is S500
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![9. Refer to the accompanying table in answering the questions
that follow: L011.8
(1)
Possible Levels
(3)
Aggregate Expenditures
(2)
Real Domestic
(C, + 1, + X, + G),
Millions
of Employment,
Output,
Millions
Millions
90
$500
$520
100
550
560
110
600
600
120
650
640
130
700
680
a. If full employment in this economy is 130 million, will
there be an inflationary expenditure gap or a recessionary
expenditure gap? What will be the consequence of this gap?
By how much would aggregate expenditures in column 3
have to change at each level of GDP to eliminate the
inflationary expenditure gap or the recessionary expenditure
gap? 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 $500
billion? By how much would aggregate expenditures in
column 3 have to change at each level of GDP to eliminate the
gap? 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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2015eefe-8566-4f43-b817-151d88e20c1e%2Fe069106c-e90a-4a58-b8a1-1dce1d339d25%2Fzvi9gvr_processed.jpeg&w=3840&q=75)
Transcribed Image Text:9. Refer to the accompanying table in answering the questions
that follow: L011.8
(1)
Possible Levels
(3)
Aggregate Expenditures
(2)
Real Domestic
(C, + 1, + X, + G),
Millions
of Employment,
Output,
Millions
Millions
90
$500
$520
100
550
560
110
600
600
120
650
640
130
700
680
a. If full employment in this economy is 130 million, will
there be an inflationary expenditure gap or a recessionary
expenditure gap? What will be the consequence of this gap?
By how much would aggregate expenditures in column 3
have to change at each level of GDP to eliminate the
inflationary expenditure gap or the recessionary expenditure
gap? 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 $500
billion? By how much would aggregate expenditures in
column 3 have to change at each level of GDP to eliminate the
gap? 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?
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