What is the economys new equilibrium

Reference no: EM13313010

Suppose we open the borders to trade so we can improve our country’s well-being, and it turns out that we export $30 billion worth of goods and import $40 billion worth of goods. Finally, suppose that society wants the government to provide $34 billion worth of public goods, what is the economy’s new equilibrium? Fill in the Exports, Imports, G and AE = C+I+G+Xn columns. GDP* = 2. Suppose it turns out that the new equilibrium from the question above is above our potential (or full employment) GDP of $1090 billion. Identify whether there is a recessionary or inflationary gap and calculate and report how big it is. (2 Hints: You will need to find the MPC, and the GDP column in the table is equivalent to the disposable income earned in the economy.)

Reference no: EM13313010

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