--%>
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 : Explain the term Continuous

    Continuous Appropriation: The constitutional or statutory expenses authorization that is renewed each year without additional legislative action. The amount obtainable might be particular, recurring sum each year; all or a specified part of the procee

    		•
  • Q : How cash and capital budget relate to

    Describe how the cash budget and the capital budget associate to proforma financial statements.The cash budget illustrates the projected flow of cash in and out of the firm for particular time periods. The capital budget illustrates planned expe

    		•
  • Q : Equilibrium level of aggregate

    Normal 0 false false

    		•
  • Q : Charted bank loan policy Normal 0 false

    Normal 0 false false

    		•
  • Q : How long do business cycles remain

    Normal 0 false false

  • Q : Multiplier for private closed economy

    Normal 0 false false

  • Q : Four-Tranche Sequential-Pay Structure

    1. How would you fund the tranche Z of the example in the securitization manual? 2. What reinvestment rate from the excess spread will guarantee that there will be sufficient money to pay0ff creditors of tranche Z? 3. When tranche Z creditors will get

    		•
  • Q : Define Tort Tort : It is a civil wrong,

    Tort: It is a civil wrong, other than a breach of contract, for which the court awards indemnity. The traditional torts comprise malpractice, negligence, assault and battery. Lately, torts have been widely expanded such that the interference with a co

    		•
  • Q : Frequency Distribution What is

    What is Frequency Distribution? Compare Categorical Frequency Distribution, Ungrouped Frequency Distribution, Grouped Frequency Distribution?

    		•
  • Q : Explain Continuously Vacant Positions

    Continuously Vacant Positions: On July 1, the positions which were continuously vacant for six successive monthly pay periods throughout the prior fiscal year are abolished by the State Controller's Office. The six successive monthly

    		•