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:

Shivering

An involuntary action of the body producing rapid muscle contractions to generate heat in response to cold.

ATP Hydrolysis

The chemical process of breaking down adenosine triphosphate (ATP) into adenosine diphosphate (ADP), releasing energy utilized by cells for various functions.

Rate

A measure of frequency or speed of a given process or activity over a specified amount of time.

Vitamin C

A water-soluble vitamin, also known as ascorbic acid, important for the growth, development, and repair of all body tissues and is involved in many body functions, including formation of collagen, absorption of iron, and immune system support.