Refer to the table below. Real Output Demanded, Billions $ 506 508 510 512 514 Price...

 

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Refer to the table below. Real Output Demanded, Billions $ 506 508 510 512 514 Price Level 108 104 100 96 92 Real Output Supplied, Billions $ 513 Ell 512 111 510 507 502 Suppose that aggregate demand increases such that the amount of real output demanded rises by $7 billion at each price level. Instructions: Enter your answers as a whole number. a. By what percentage will the price level increase? percent Will this inflation be demand-pull inflation, or will it be cost-push inflation? (Click to select) b. If potential real GDP (that is, full-employment GDP) is $510 billion, what will be the size of the positive GDP gap after the change in aggregate demand? $ billion c. If government wants to use fiscal policy to counter the resulting inflation without changing tax rates, would it increase government spending or decrease it? (Click to select) Refer to the table below. Real Output Demanded, Billions $ 506 508 510 512 514 Price Level 108 104 100 96 92 Real Output Supplied, Billions $ 513 Ell 512 111 510 507 502 Suppose that aggregate demand increases such that the amount of real output demanded rises by $7 billion at each price level. Instructions: Enter your answers as a whole number. a. By what percentage will the price level increase? percent Will this inflation be demand-pull inflation, or will it be cost-push inflation? (Click to select) b. If potential real GDP (that is, full-employment GDP) is $510 billion, what will be the size of the positive GDP gap after the change in aggregate demand? $ billion c. If government wants to use fiscal policy to counter the resulting inflation without changing tax rates, would it increase government spending or decrease it? (Click to select)

Answer rating: 100% (QA)

a To calculate the percentage increase in the price level we can use the formula Percentage Change N... View the full answer