How large is the ad shortfall

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Reference no: EM13188627

Use the following data to answer the following question:

Price level 10 20 30 40 50 60 70 80 90 100

Real GDP $500 600 680 750 820 880 910 940 960 970
supplied
Real GDP $960 920 880 840 800 760 720 680 640 600
Demanded

(a) If full employment occurs at real output of $880, how large is the real GDP gap?
(b) How large is the AD shortfall?

( c) What will happen to the price if AD increases enough to restore full employment?

(d) Assuming MPC=0.75, how will macro equilibrium change if the government purchases inrease by $20?

Reference no: EM13188627

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