Essay
Consider the following multiplier model:
AE = 8,000 + 0.75Y,and potential output equals 35,000.
(1)Calculate equilibrium output.
(2)State what fiscal policy you would recommend to eliminate the inflationary or recessionary gap.
(3)Calculate the change in government spending required to eliminate the gap.
Correct Answer:
Verified
(1)In equilibrium,Y = AE.Thus,Y = 8,000 ...View Answer
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Correct Answer:
Verified
View Answer
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