Use the figure to answer the following questions. Explain your reasoning and show your answers on the graph. Copy the image to MSWord, and draw the appropriate lines using the 'design' tab and then select the shapes you want to include, lines, arrows, etc. Save your answer and upload your file. a.      At which equilibrium point the economy has an inflationary gap, and what is its value in percentage points? b.     At what point the economy is at full employment, and what is its value in trillions of dollars? c.      Draw an AD showing a recessionary gap of 0.5 trillion dollars

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Use the figure to answer the following questions. Explain your reasoning and show your answers on the graph. Copy the image to MSWord, and draw the appropriate lines using the 'design' tab and then select the shapes you want to include, lines, arrows, etc. Save your answer and upload your file.

a.      At which equilibrium point the economy has an inflationary gap, and what is its value in percentage points?

b.     At what point the economy is at full employment, and what is its value in trillions of dollars?

c.      Draw an AD showing a recessionary gap of 0.5 trillion dollars.

 

 

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Price level (GDP deflator, 2007 = 100)
LAS
130
120
110
100
90
O
12.0
-B-
ADO
SAS
AD₁
12.5
13.0 13.5 14.0
Real GDP (trillions of 2007 dollars)
Transcribed Image Text:Price level (GDP deflator, 2007 = 100) LAS 130 120 110 100 90 O 12.0 -B- ADO SAS AD₁ 12.5 13.0 13.5 14.0 Real GDP (trillions of 2007 dollars)
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