Use the Table Below to Answer the Following Questions

question 15

Essay

Use the table below to answer the following questions.Assume that investment, net exports, government expenditures, and taxes do not change with changes in real GDP. (a) What is the size of the multiplier in this economy?
(b) If taxes are zero, government expenditures are $5, investment is $3, and net exports are zero, what is the equilibrium GDP?
(c) If taxes are $10, government expenditures are $10, investment is $6, and net exports are zero, what is the equilibrium GDP?
(d) Assume investment is $50, taxes are $50, and net exports and government expenditures are each zero.The full-employment level of real GDP is $540.How much of a reduction in taxes is needed to eliminate the recessionary gap?
(e) Assume that investment, net exports, and taxes are zero.Government expenditures are $10 and the full-employment level of real GDP is $530.By how much must government spending be reduced to eliminate the inflationary gap?

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Definitions:

Picket Lines

A method of protest where workers, particularly those on strike, form a line outside a place of employment to dissuade others from entering and to draw public attention to their cause.

Collective Bargaining

The process in which employers and the representatives of a body of employees negotiate the terms and conditions of employment, including wages, work hours, and workplace conditions.

Lawful Strike

A work stoppage by a union's members that is conducted according to the legal requirements and is often part of a collective bargaining process.

Picket Lines

Physical or symbolic boundary lines established by striking workers or protesters around a place of employment to discourage or prevent others from entering.