Income will survive leakages of tax-import spending

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Assume that Jamaicans' taxes, imports, and saving behavior means that two-thirds of any change in income will survive leakages of tax, import spending, and saving. With this information you can calculate the multiplier at work in the Jamaican economy.

Assume also that Jamaica's potential GDP = $400b and that actual GDP = $340b. With this information you can calculate Jamaica's GDP gap.

What would be the initial change in spending that will bring the economy to full employment -that is, what is the appropriate dosage of additional spending that will close the GDP gap?

Desired change in initial spending = +$____billion

[Answer with a whole number: no dollar sign and no decimal]

Reference no: EM13771725

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