An economy is in equilibrium at a GDP of $100, and at a GDP of $400 there
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Question:
An economy is in equilibrium at a GDP of $100, and at a GDP of $400 there is a recessionary gap of $30.
1. Find the MPC, MPS, and Multiplier
2. On a correctly labeled Consumption Function Graph, show this economy in relation to the reference line (45 degree line) You do not need to calculate AE at 0 GDP nor label it on the graph.
3. How much investment would be needed to achieve an equilibrium GDP of $500?
4.How much Government spending would be needed to achieve an equilibrium GDP of $500
Expert Answer:
Answer 1 Finding the MPC MPS and Multiplier Given information Equilibrium GDP 100 Recessionary gap a... View the full answer
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