The figure below depicts the economy of Altrua, which is presently in equilibrium. Enter your responses below rounded to one decimalplace.ASADLAS340 360 380 400 420 440 460 480 500 520Price levela. The size of its recessionary gap is $b. The size of this gap as a percentage of its actual GDP is

A recessionary gap is when: total result is underneath possible result. In the event that there is…

The figure below depicts the economy of Altrua, which is presently in equilibrium. Enter your responses below rounded to one decimal place. AS AD LAS Price level O 340 360 380 400 420 440 460 a. The size of its recessionary gap is $ b. The size of this gap as a percentage of its actual GDP is 500 520

The figure below depicts the economy of Altrua, which is presently in equilibrium. Enter your responses below rounded to one decimal place. AS AD LAS Price level O 340 360 380 400 420 440 460 a. The size of its recessionary gap is $ b. The size of this gap as a percentage of its actual GDP is 500 520

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section: Chapter Questions

Problem 7TY

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The figure below depicts the economy of Altrua, which is presently in equilibrium. Enter your responses below rounded to one decimal place. Price level 340 360 380 400 420 440 460 480 500 520 Real GDP AS AD LAS
a) About Country A, what is your estimate of the country's marginal propensity to consume (MPC) based on the following information on its GDP (Y) and the components thereof (in billion dollars) for two past years? Show calculation. Year 1 Year 2 c) GDP C I 11200 8000 2200 12000 8500 2400 G 800 880 The next few parts are about Country B, whose government plans to cut taxes by $24 billion as a measure to fight the current recession. The marginal propensity to consume (MPC) in Country B is known to be 34. There will be no crowding-out effect. e) NX 200 220 b) What is the initial effect (in billion dollars) of the tax cut on Country B's aggregate demand? (The "initial effect" here refers to the effect on AD after only the first round of increased spending.) What is the total effect of the tax cut on aggregate demand? Explain why it is different from the initial effect. d) How does the total effect of this $24 billion tax cut compare to the total effect of a $24 billion increase in…
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