The Figure Given Below Depicts Macroeconomic Equilibrium in a Closed

question 4

Multiple Choice

The figure given below depicts macroeconomic equilibrium in a closed economy.Assume that the spending multiplier in this economy is 1.5. Figure 10.5 Refer to Figure 10.5.If the target or potential level of real GDP is $1, 200, then at an equilibrium real GDP level of $900:

• A)the GDP gap is zero.
• B)there exists a recessionary gap that could be closed by a $200 decrease in planned aggregate expenditures.
• C)the GDP gap is $200.
• D)actual real GDP exceeds potential real GDP by $300.
• E)there exists a recessionary gap that could be closed by a $200 increase in autonomous investment spending.

---

Definitions:

National Association

A type of organization that operates on a countrywide level, aiming to bring together individuals or groups with common interests or professions.

Civil Rights

The rights of citizens to political and social freedom and equality, often protected under law from discriminatory practices.

Advancement

The process of moving forward or making progress, especially in one's career or skills development.

Incorporation

The process by which the Bill of Rights is applied to state and local governments through the Fourteenth Amendment.