--%>
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 : Question on budget line On a Lotto

    On a Lotto Canada ticket A person won $15 at the local 7-Eleven & decided to spend all the winnings money on bags of peanuts and candy bars. The cost of candy bars= $.75 and the cost of peanuts = $1.50. a. In general, how woul

    		•
  • Q : Externally held public debt and

    Normal 0 false false

  • Q : What is Indirect Costs Indirect Costs :

    Indirect Costs: The costs which by their nature can’t be readily related with a particular organization unit or program. Similar to general administrative expenses, indirect costs are dispersed to the organizational unit(s) or programs that bene

    		•
  • Q : Modify-open market operations-switching

    Normal 0 false false

    		•
  • Q : What is Financial Restructuring

    Financial Restructuring: It is the reorganizing of a business' liabilities and assets. The procedure is frequently related with corporate restructuring where an organization's on the whole structure and its processes are refurbished. Though companies

    		•
  • Q : Explain Feasibility Analysis

    Feasibility Analysis: It is an analysis of the ability to finish a project successfully, taking into account legal, technological, economic, scheduling and various other factors. Instead of just diving into a project and hoping for th

    		•
  • Q : Aggregate demand or aggregate supply

    Normal 0 false false

  • Q : Explain Unscheduled Reimbursements

    Unscheduled Reimbursements: The Reimbursements collected by an agency which were not budgeted and are accounted for by an individual reimbursement class of an appropriation. To expend unscheduled reimbursements, the budget revision sh

    		•
  • Q : Define Spot Bill Spot Bill : It is an

    Spot Bill: It is an introduced bill which makes non-substantive modifications in a law, generally with the intent to amend the bill at a later date to comprise substantive law modifications. This procedure gives a means for circumventing the deadline

    		•
  • Q : Explain Public Service Enterprise Fund

    Public Service Enterprise Funds: For legal base accounting purposes, the fund categorization which identifies funds utilized to account for the transactions of self-supporting enterprises which render goods or services for a direct charge to user (tha

    		•