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Assume the following data for this economy. Full employment GDP occurs at $400. Assume that the MPC = 0. All figures are in billions of dollars.
Assume the following data for this economy. Full employment GDP occurs at $400. Assume that the MPC = 0.75. All figures are in billions of dollars.
GDP C S I G
240 244 -4 8 8
260 260 0 8 8
280 276 4 8 8
300 292 8 8 8
320 308 12 8 8
340 324 16 8 8
360 340 20 8 8
380 356 24 8 8
400 372 28 8 8
1.Equilibrium GDP for this economy is ___________.
2.What is the problem facing this economy? _____________________
3.What general solution do you recommend? ____________________
4.The simple multiplier in this problem is equal to __________________.
5.What is the needed change in government spending: ________________
