What level of output will this economy operate

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If you know the slope of the AE curve is .80, then you can complete the schedule below. Do so. Hint words: Linear relationship Income Aggregate Expenditures (C + I + G) $1300 $1700 $2300 $2500 $3300 _____ $4300 _____ $5300 _____ $6300 _____ Draw this graph complete with an AP curve. At what level of output (income) will this economy operate? Line up this AE/AP graph above a production graph. Demonstrate with a dotted line that there is a recessionary gap where potential output is $5800. How much of a gap is there? What is the MPS and the Multiplier? The government can close this gap two ways. They can increase government expenditures by $_____________ or they can reduce taxes by $______________. Show all work.

Reference no: EM131101390

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