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:

Wage

A wage is the amount of money paid to an employee by an employer in exchange for work performed, typically expressed on an hourly, daily, or piecework basis.

Monopsonistic Cartel

A market condition where there is only one buyer for a product or service, giving them significant power over sellers.

Antitrust Laws

Rules and regulations prohibiting actions that restrain, or are likely to restrain, competition.

Major League Baseball

A professional baseball organization consisting of teams in the United States and Canada, representing the highest level of professional baseball.