2 The aggregate demand and supply for Cancum are shown in the table below. Potential GDP (LAS) is $800 billion.Price Index105110115128125130135140Aggregate QuantityDemanded900800700600500400300200Aggregate QuantitySupplied200350500600700800900950a. 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.< PrevSearch2 of 14#Next >Next

Equilibrium in the economy occurs at the point where aggregate demand (AD) and aggregate supply (AS)…

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The aggregate demand and supply for Cancum are shown in the table below. Potential GDP (LAS) is $800 billion.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The aggregate demand and supply for Cancum are shown in the table below. Potential GDP (LAS) is $800 billion.
Price Index
105
110
115
128
125
130
135
140
Aggregate Quantity
Demanded
900
800
700
600
500
400
300
200
Aggregate Quantity
Supplied
200
350
500
600
700
800
900
950
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.
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