The aggregate demand and supply for Cancum are shown in the table below. Potential GDP (LAS) is $1,200 billion. Price Index 105 110 115 120 125 130 135 140 Aggregate Quantity Demanded 1,300 1,200 1,100 1,000 900 800 700 600 Aggregate Quantity Supplied 325 650 850 1,000 1,100 1,200 1,300 1,350 a. If the economy is in equilibrium, it experiencing a(n) (Click to select)gap of $ b. Suppose government uses countercyclical fiscal policy to close the gap. In order to achieve full employment AD would have to (Click to select) by $ c. As a result of this change, the inflation rate would be %. Round your answer to 2 decimal places.

The aggregate demand and supply for Cancum are shown in the table below. Potential GDP (LAS) is $1,200 billion. Price Index 105 110 115 120 125 130 135 140 Aggregate Quantity Demanded 1,300 1,200 1,100 1,000 900 800 700 600 Aggregate Quantity Supplied 325 650 850 1,000 1,100 1,200 1,300 1,350 a. If the economy is in equilibrium, it experiencing a(n) (Click to select)gap of $ b. Suppose government uses countercyclical fiscal policy to close the gap. In order to achieve full employment AD would have to (Click to select) by $ c. As a result of this change, the inflation rate would be %. Round your answer to 2 decimal places.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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