What are the sizes of the mpc, the mps, and the multiplier

Assignment Help Macroeconomics

Reference no: EM133336867

Question: Refer to the accompanying table to answer the questions that follow.

(1) Possible Levels of Employment, (Millions)	(2) Real Domestic Output, (Billions)	(3) Aggregate Expenditures (C + I_g + G)_, (Billions)
9	$500	$520
10	550	560
11	600	600
12	650	640
13	700	680

a. If full employment in this economy is 13 million, will there be an inflationary expenditure gap or a recessionary expenditure gap? (Click to select) Inflationary expenditure gap Recessionary expenditure gap

What will be the consequence of this gap? (Click to select) 20 million shortfall of employment 20 million excess of employment

By how much would aggregate expenditures in column 3 have to change at each level of GDP to eliminate the inflationary expenditure gap or the recessionary expenditure gap?

Aggregate expenditures would have to (Click to select) increase decrease by $ billion.

What is the multiplier in this example?

b. Will there be an inflationary expenditure gap or a recessionary expenditure gap if the full-employment level of output is $500 billion? (Click to select) Inflationary expenditure gap Recessionary expenditure gap

By how much would aggregate expenditures in column 3 have to change at each level of GDP to eliminate the gap?

Aggregate expenditures would have to (Click to select) increase decrease by $ billion.

What is the multiplier in this example?

c. Assuming that investment, net exports, and government expenditures do not change with changes in real GDP, what are the sizes of the MPC, the MPS, and the multiplier?

Reference no: EM133336867

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