Q. An economy that is in equilibrium and operating below its full-employment capacity must be experiencing a(n)

a. inflationary period

b. recessionary gap

c. a surplus budget outcome

d. market correction

e. inflationary gap 20

What's tax multiplier if MPC = 0.75? Given full-employment output = $2,800, equilibrium output = $2,500 and MPS = 0.25, which of following changes would most likely bring economy to a full employment level of national output?

1) Solve for equilibrium income of this economy: C = 100 + .8(Y-T) I = 100 G = 100 T = 100 (T = total taxes)

2) What is MPC?

3) What is income multiplier?

4) What is tax multiplier?

5) If government wants to increase equilibrium income by 200, what is necessary increasing G?

6) If government wants to increase equilibrium income by 200, but decreasing taxes, how much should tax cut be?