Suppose an economy can be represented by the following table, in which employment is in millions of workers and GDP and AE are expressed in billions of dollars: Employment 100 Real GDP Aggregate Expenditures 1200 1275 105 1300 1350 110 1400 1425 115 1500 1500 120 1600 1575 125 1700 1650 Use the table to answer the following: a. What is the equilibrium level of GDP? b. What kind of expenditure gap exists if full employment is 120 million workers? What is its size? c Suppose government spending, taxes, and net exports are all independent of the level of real GDP. What is the multiplier in this economy? d. Suppose instead that the economy is producing at equilibrium GDp. If this GDP is $200 billion below the econormy's potential, what is the size of the recessionary expenditure gap?
Suppose an economy can be represented by the following table, in which employment is in millions of workers and GDP and AE are expressed in billions of dollars: Employment 100 Real GDP Aggregate Expenditures 1200 1275 105 1300 1350 110 1400 1425 115 1500 1500 120 1600 1575 125 1700 1650 Use the table to answer the following: a. What is the equilibrium level of GDP? b. What kind of expenditure gap exists if full employment is 120 million workers? What is its size? c Suppose government spending, taxes, and net exports are all independent of the level of real GDP. What is the multiplier in this economy? d. Suppose instead that the economy is producing at equilibrium GDp. If this GDP is $200 billion below the econormy's potential, what is the size of the recessionary expenditure gap?
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter7: Production And Growth
Section: Chapter Questions
Problem 5CQQ
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