4. Suppose an economy is described by the aggregate demand curve: M Y = 2000 +1.25 * G+2.5* P If Y* (the potential output) is equal to 6000, G = 1200, and P = 1, what must M equal to generate GDP, which is 3% lower than the potential. (a) 1072 (b) 1000 (c) 982 (d) 928 (e) impossible to calculate

4. Suppose an economy is described by the aggregate demand curve: M Y = 2000 +1.25 * G+2.5* P If Y* (the potential output) is equal to 6000, G = 1200, and P = 1, what must M equal to generate GDP, which is 3% lower than the potential. (a) 1072 (b) 1000 (c) 982 (d) 928 (e) impossible to calculate

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

4. Suppose an economy is described by the aggregate demand curve:
M
Y = 2000 +1.25 * G + 2.5 *
P
If Y* (the potential output) is equal to 6000, G = 1200, and P = 1, what
must M equal to generate GDP, which is 3% lower than the potential.
(a) 1072
(b) 1000
(c) 982
(d) 928
(e) impossible to calculate

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