ECON203-LAB4-Q7 - Queetlon 7[12 points An elmnorrly is in...

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Unformatted text preview: Queetlon 7 [12 points] An elmnorrly is in equilibrium at a real GDP of 850. but current estimates put potential oulput atYp E 900. a] Answer the lollowirg fill-in the blank queslion. When Y = 850ande= Soothereis a winery gapandlne sizeoflhegap is equalln 50 . b) Answer lhe following fill-in ll1e blank question Neill Keep as much precision as pc3sible during your calculalions. Your final answm should be aculralleln atleasllhree decimal places. Research suggesls Inat lhe MP0 is I175, the MPM is 0.1. and the netlax rate is 0.2.Tl1erefure.lhe slope ofAE is 0.5 and the multiplier is 2 which means lhet G must be increased by 25 lo remove the gap and achieve equilibrium. :1 ll lne government preferred In change Ils net lax ralle lo ellminate lne gap, and not change gnvemment expenditure. M31 new lax rale would be required In eliminale the gap? NOIIL Keep as much precnslun as pc33lble during your calwlalions. Your final answer should be aculraleln atleasllhree decimal places. Tal rails required lloelirrlinale ll'le gap = 0.163 Marking: (a) Gal: mo Yhur answer was: recessionaryI Congramlatiens! ‘l‘bu have entered ll'le correct answer. ...
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