Assume the following to answer the following questions: C= 1000+ .9 (Y-T) Tax rate = 0.1Y Imports = 0.1(Y-T) Government spending = 200 Investment = 300 Exports = 600 Potential Output = $8000What is the current GDP in this economy? Show your work.The economy described above is in the ? gap of the AD/AS Model.By how much must government spending increase or decrease to close this gap and bring the economy to Potential Output? Show your work
Assume the following to answer the following questions: C= 1000+ .9 (Y-T) Tax rate = 0.1Y Imports = 0.1(Y-T) Government spending = 200 Investment = 300 Exports = 600 Potential Output = $8000What is the current GDP in this economy? Show your work.The economy described above is in the ? gap of the AD/AS Model.By how much must government spending increase or decrease to close this gap and bring the economy to Potential Output? Show your work
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Assume the following to answer the following questions:
- C= 1000+ .9 (Y-T)
- Tax rate = 0.1Y
- Imports = 0.1(Y-T)
- Government spending = 200
- Investment = 300
- Exports = 600
- Potential Output = $8000
What is the currentGDP in this economy? Show your work.
The economy described above is in the ? gap of the AD/AS Model.
By how much must government spending increase or decrease to close this gap and bring the economy to Potential Output? Show your work
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