2. what will happen to equilibrium income in the following, Ask an Expert

Economics

1. Income is $8 billion and the mpe is 0.8. Potential output is $10 billion.
a. What is the recessionary gap?
b. How much of an increase in government spending would be required to close the gap?

2. What will happen to equilibrium income in the following cases?
a. The mpe is 0.8, and autonomous consumption declines by $200.
b. The mpe and mpc are both 0.5, and taxes rise by $400.

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9696693

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