--%>
Assignment Help - homework help

Inflationary expenditure gap or recessionary expenditure gap

Refer to the table below in answering the questions which follow:

1617_inflationary expenditure gap or recessionary expenditure gap.png

In this economy if full employment is 130 million, will there be an inflationary expenditure gap or recessionary expenditure gap? Describe the consequence of this gap? By how much would aggregate expenditures in column 3 ought to change at each level of GDP to remove the inflationary expenditure gap or recessionary expenditure gap? Illustrates. Describe multiplier in this example?

E

Expert

Verified

A recessionary gap. Equilibrium GDP is $600 billion, whereas full employment GDP is $700 billion. Employment = 20 million less than at full employment. Aggregate expenditures would have to rise by $20 billion (= $700 billion -$680 billion) at each level of GDP to abolish the recessionary gap. The MPC is .8, thus the multiplier is 5.

   Related Questions in Finance Basics

  • Q : Shapes of marginal-cost and the

    Normal 0 false false

    		•
  • Q : Value $100 is received at the beginning

    $100 is received at the beginning of year 1, $200 is received at the beginning of year 2, and $300 is received at the beginning of year 3. If these cash flows are deposited at 12 percent, their combined future value at the end of year 3 is

    		•
  • Q : Define the term Unencumbered Balance

    Define the term Unencumbered Balance: It is the balance of an appropriation not so far committed for particular purposes.

    		•
  • Q : What is the cost of equity Intermediate

    Intermediate Finance   Always leave 4 decimals in the ($) numbers in your calculations (e.g. PMT = $10.8924) and, particularly, 6 decimals for interest rates (e.g. r = 0.078643 or 7.8643%). QUESTION 1:?Conlins Manufactu

    		•
  • Q : Describe trustworthy collateral from

    Describe trustworthy collateral from the lenders' perspective? Describe whether accounts receivable and inventory are trustworthy collateral. Assets which are readily marketable, of stable value, and not likely to "disappear" make for trustwort

    		•
  • Q : Compounded Quarterly In Financial

    1. If you deposit money today in an account that pays 4.3% annual interest, how long will it take to double your money? Round your answer to the nearest whole. years 2. Find the present value of the following ordinary annuities. Ro

    		•
  • Q : Aggregate demand or aggregate supply

    Normal 0 false false

  • Q : What is Shared Revenue Shared Revenue:

    Shared Revenue: It is a state-imposed tax, like the gasoline tax, that is shared with the local governments in proportion, or significantly in proportion, to the amount of tax collected or generated in each local unit. The tax might be collected eithe

    		•
  • Q : Fin 335 International finance 1. The

    1. The exchange rate is 1.22 Swiss francs per U.S. dollar. How many U.S. dollars are needed to purchase 1,500 Swiss francs? [$1,229.51] 2. You are planning an extended trip to Hong Kong. You have located some housing

    		•
  • Q : Computing the amount of excess reserves

    Normal 0 false false