Question: Use the information in the following table to answer the following questions.
Draw a graph by using the numbers from the above table. Carefully label the two axes, the 45-degree line (potential GDP), the AE curve, and the equilibrium level of real GDP. If the potential real GDP is $750, and the economy is in a recession. Show the GDP gap and recessionary gap in the graph.
|
Y
|
C
|
I
|
G
|
X
|
|
$100
|
$120
|
$20
|
$30
|
-$10
|
|
$300
|
$300
|
$20
|
$30
|
-$10
|
|
$500
|
$480
|
$20
|
$30
|
-$30
|
|
$700
|
$660
|
$20
|
$30
|
-$50
|
a) What is the value of autonomous consumption?
FOR B & C (if the potential real GDP is $750)
b) What is the GDP gap?
c) What is the recessionary gap?