Unformatted text preview: GDP gap=14286- 12600= 1686 Recessionary gap= GDP gap/ K= 1686/4= 421.5 the government should spend $ 421.5 to eliminate this gap. T= Recessionary gap/MPC=421.5/.75=562 the government should give $562 in tax cut to eliminate this gap....
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- Winter '10
- Natural rate of unemployment, GDP gap/ K=