Country X's long run potential full employment level of Real GDP is estimated to be $24,100,000. However, the current actual Real GDP in country X stands at $18,000,000. Additional data shows consumers in country X have a marginal propensity to save (MPS) equal to 7%. Answer the following questions based on the aboveinformation. Suppose new calculations show country X faces a recessionary Real GDP = $4,800,000, and the income multiplier is now equal to8. By how much shouldAutonomous consumption" (spending) increase to close the $4,800,000 recessionary gap?

Detailed explanation:Step 1: Calculate the MPC, or marginal propensity to consume:The complement of…

Answered: Country X's long run potential full…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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