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(Table: Keynesian Equilibrium Analysis with Taxes and Net Exports) Given

question 212

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(Table: Keynesian Equilibrium Analysis with Taxes and Net Exports) Given the data in the table, if full employment income is $1,000 while the current equilibrium is $750, a(n) _____ gap exists, such that a(n) _____ in spending equal to _____ is needed to close the gap. (Table: Keynesian Equilibrium Analysis with Taxes and Net Exports)  Given the data in the table, if full employment income is $1,000 while the current equilibrium is $750, a(n)  _____ gap exists, such that a(n)  _____ in spending equal to _____ is needed to close the gap.   A)  inflationary; decrease; $100 B)  inflationary; decrease; $250 C)  recessionary; increase; $100 D)  recessionary; increase; $250


Definitions:

Differential Cost

Differential cost, or incremental cost, is the difference in total cost that will result from selecting one option over another in decision-making.

Relevant Costs

Relevant costs are those costs that should be considered when making decisions. They are directly affected by the decision in question and can include future costs that will differ among alternatives.

Fixed Manufacturing Expenses

Costs that do not vary with the volume of production, such as rent, depreciation of manufacturing equipment, and salaries of permanent factory staff.

Selling and Administrative Expenses

Expenses incurred from selling products or services and managing the business, excluding production costs.

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