Use the Table Below to Answer the Following Questions

question 30

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:

Glycolysis

Anaerobic breakdown of glucose that results in a gain of two ATP and the production of pyruvate; occurs in the cytoplasm of cells.

Electron Transport Chain

A sequence of electron carrier molecules that transfer electrons and release energy used to make ATP, found in the inner mitochondrial membrane.

Citric Acid Cycle

A series of chemical reactions used by all aerobic organisms to generate energy through the oxidation of acetate derived from carbohydrates, fats, and proteins into carbon dioxide.

Glycolysis

The metabolic pathway that converts glucose into pyruvate, generating energy in the form of ATP.