Using the aggregate expenditures model, answer the questions below to show how government fiscal policy could eliminate either a recessionary expenditure gap or an inflationary expenditure gap. Full employment 6000 Tools 5 5000 Gap 54000 3000 2000 1000 45° 1000 2000 3000 4000 5000 6000 Real GDP (billions of dollars) a. Given that full employment exists at $4,500 billion, does a recessionary gap or an inflationary gap exist? (Click to select) b. Identify this gap using the diagram above. Instructions: (1) Use the tool provided 'Gap' to show this expenditure gap. The tool will display a two- ended arrow. Drag one end of the arrow to the lowest value of the expenditure gap and drag the other end to the highest value of the gap. c. What is the dollar amount of the expenditure gap? billion Aggregate expenditures (billions of dollars)

Using the aggregate expenditures model, answer the questions below to show how government fiscal policy could eliminate either a recessionary expenditure gap or an inflationary expenditure gap. Full employment 6000 Tools 5 5000 Gap 54000 3000 2000 1000 45° 1000 2000 3000 4000 5000 6000 Real GDP (billions of dollars) a. Given that full employment exists at $4,500 billion, does a recessionary gap or an inflationary gap exist? (Click to select) b. Identify this gap using the diagram above. Instructions: (1) Use the tool provided 'Gap' to show this expenditure gap. The tool will display a two- ended arrow. Drag one end of the arrow to the lowest value of the expenditure gap and drag the other end to the highest value of the gap. c. What is the dollar amount of the expenditure gap? billion Aggregate expenditures (billions of dollars)

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section9.A: The Simple Algebra Of Income Determination And The Multiplier

Problem 4TY

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Using the aggregate expenditures model, answer the questions below to show how government fiscal policy could eliminate either a recessionary expenditure gap or an inflationary expenditure gap.
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