Based on research conducted by the Department of Economic Analysis, the government and policy advisors of an economy believe that the full employment GDP is $7500 billion, and Pe, the overall expected price level is 118. In addition, the researchers estimate that the short run aggregate supply equation is Y = Ypot 80 (P- Pe), where Ypot is the potential level of output. In 2016, the population was 400 million, and the structure of the economy was described by the following equations for household consumption behavior and taxes received: C=100+0.8DI, and T =0.25Y where all monetary values are in billions of dollars. Government spending was fixed at $1700 billion, and the firm's investment behavior was fixed at $800 billion. Trading is allowed in this economy and in 2016, trading occurred such that the trade account was balanced. That is, net exports (X-IM) was equal to zero.

After Reading the above plot, answer the following questions :

3. what is the level of real GDP per capita in 2016 (report your answer to 2 decimal places)

5. Fill in the blanks from the following options (You can use one option more than once):

an inflationary Gap/a recessionary gap/deficit/equilibrium level of GDP/full employment level of GDP/negative/positive/Surplus

Question: In 2016 the ______ was greater than _______ and the government's budget balance was _______. From this we can conclude that the economy was in ______ and the government was operating with a ______.

6. What is the spending multiplier in this economy? (report your answer to 2 decimal places)

7. what is the tax multiplier multiplier in this economy (report your answer to 2 decimal places)

Answer rating: 100% (QA)

The level of real GDP per capita in 2016 is 650000 5In 2016 the recessionary ga... View the full answer