Refer to the Following Table to Answer the Questions

question 26

Essay

Refer to the following table to answer the questions. (a) Assuming that investment, net exports, government expenditures, and taxes do not change with changes in real GDP, what are the sizes of the MPC, the MPS, and the multiplier?
(b) If full employment in this economy is 65 million, will there be an inflationary or recessionary gap? What will be the consequence of this gap? By how much would aggregate expenditures in column 3 have to change at each level of GDP to eliminate the inflationary or recessionary gap? Explain.(c) Will there be an inflationary or recessionary gap if the full-employment level of output is $250 billion? Explain the consequences.By how much would aggregate expenditures in column 3 have to change at each level of GDP to eliminate the inflationary or recessionary gap? Explain.

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Definitions:

Aspirin

A medication used to reduce pain, fever, inflammation, and prevent blood clots, also known for its role in reducing the risk of heart attacks.

Mucosa

The moist, inner lining of some organs and body cavities, such as the nose, mouth, lungs, and stomach.

Muscularis

A layer of muscle in the walls of various organs, including the digestive tract, responsible for movement and mixing of contents.

Segmental Contraction

A mechanism of movement in the gastrointestinal tract where segments of intestines alternately contract and relax to mix and propel contents.