Country X's long run potential full employment level of Real GDP is estimated to be $21,300,000....
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Country X's long run potential full employment level of Real GDP is estimated to be $21,300,000. However, the current actual Real GDP in country X stands at $19,000,000. Additional data on spending habits shows consumers in country X consume $0.90 out of every additional $1 income they receive. Answer the following questions based on the above information. 1. Is Country X in a recessionary or an inflationary gap? Briefly explain your answer. II. What is the dollar value of the GDP gap? III. Calculate country X's Marginal Propensity to Consume (MPC), and Marginal Propensity to Save (MPS)? Country X's long run potential full employment level of Real GDP is estimated to be $21,300,000. However, the current actual Real GDP in country X stands at $19,000,000. Additional data on spending habits shows consumers in country X consume $0.90 out of every additional $1 income they receive. Answer the following questions based on the above information. 1. Is Country X in a recessionary or an inflationary gap? Briefly explain your answer. II. What is the dollar value of the GDP gap? III. Calculate country X's Marginal Propensity to Consume (MPC), and Marginal Propensity to Save (MPS)?
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Answer rating: 100% (QA)
I Recessionary or Inflationary Gap Country X is in a recessionary gap This conclusion is drawn from ... View the full answer
Related Book For
Entrepreneurial Finance
ISBN: 978-1305968356
6th edition
Authors: J. Chris Leach, Ronald W. Melicher
Posted Date:
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