By how much will unemployment change after policy taken

Reference no: EM13241911

you have been appointed as chair of Economic Advisors in Fantasyland. Income is currently $600,000, unemployment is 5 percent, and there are signs of coming inflation. You rely on a research assistant for specific numbers. He tells you that full employment GDP is $564,000 and MPE = 0.5.

a. The government wants to eliminate the inflationary gap by changing expenditures. What policy do you suggest?

b. By how much will unemployment change after your policy has taken effect?

Reference no: EM13241911

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