Using the following table: 1. Fill the final column of the table. 2. compute the

Question

Using the following table:

1. Fill the final column of the table.

2. compute the value of the marginal propensity to consume. MPC = ???.

3. Compute the value of the multiplier. Multiplier = ???.

4. Equilibrium income is $_________??? billion.

5. If potential output is $400 billion, what type of real GDP gap is there? Chech one:

None, Recessionary,Inflationary.

6 what kind of fiscal policy would a Kenesia propose to close the real GDP gap? Check one:

none, expansionary, contractionary

7. Assuming the Keynsia selects a change in government spending to close the gap, by how much should govermnet purchase ( G) be changed to close the real GDP gap? G______???.

Explanation / Answer

2.compute the value of the marginal propensity to consume. MPC =0.8

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