If Equilibrium GDP Is $800 Billion Greater Than the Full

question 131

Short Answer

If equilibrium GDP is $800 billion greater than the full employment GDP and the multiplier is 4,how much is the inflationary gap?

---

Definitions:

Economic Growth

A rise in the production of goods and services per capita over a certain time frame.

Saving Rate

The proportion of income that is not spent on consumption but is instead saved by individuals or entities.

National Debt

The total amount of money that a country's government has borrowed, usually as a result of spending more than it receives in taxes.

Vertical Equity

A principle in taxation stating that taxpayers with a higher ability to pay should contribute more in taxes than those with a lesser ability to pay.