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Q. The table below explain how is the aggregate demand and short-run aggregate provide schedules of a country in which potential GDP is $1050 billion:
Price level Real GDP demanded(billions of 2005 dollars) Real GDP supplied in the short run (billions of 2005 dollars)100 1150 1050110 1100 1100120 1050 1150130 1000 1200140 950 1250150 900 1300160 850 1350
a. Does the country have an inflationary gap or a recessionary gap and Illustrate what is its magnitude?
b. Elucidate the effects of an increase in consumer spending on the short-run macroeconomic equilibrium.
c. Elucidate the effects of an increase in business investment on the short-run macroeconomic equilibrium.
d. Elucidate the effects of an increase in exports on the short-run macroeconomic equilibrium.
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