Refer to the Following Table to Answer the Questions

question 32

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:

Anaerobic Respiration

A form of cellular respiration that occurs without oxygen, producing energy and lactic acid or ethanol.

Creatine Phosphate

An energy storage molecule in muscles that helps rapidly regenerate ATP during high-intensity, short-duration exercises.

Aerobic Respiration

The metabolic process of breaking down substrates with oxygen to produce ATP, carbon dioxide, and water as by-products, occurring in mitochondria.

Isotonic Contraction

A type of muscle contraction in which the muscle changes length while the tension remains constant, usually resulting in movement.