What is the size of the output gap

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Reference no: EM13180240

Assume you have the following model of the expenditure sector:

Sp = C + I + G + NX

C = 400 + (0.8)YD

Io = 200

G = 300 + (0.1)(Y* - Y)

YD = Y - TA + TR

NXo = - 40

TA = (0.25)Y TRo = 50

What is the size of the output gap if potential output is at Y* = 3,000?

Reference no: EM13180240

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