Question

For the following economy, find autonomous expenditure, the
multiplier, short-run equilibrium output, and the output gap. By
how much would autonomous expenditure have to change to eliminate
the output gap?

C |
= 450 + 0.75 (Y – T ) |

I ^{p} |
= 200 |

G |
= 140 |

NX |
= 60 |

T |
= 100 |

Y* |
= 3,200 |

**Instructions:** Enter your responses as absolute
numbers.

Autonomous expenditure:

Multiplier:

Short-run equilibrium output:

There is (Click to select) a
recessionary an
expansionary no output gap in the amount
of .

Autonomous expenditure would need to (Click to
select) decrease stay the
same increase by to eliminate the
output gap.

Answer #1

C = 3,500 + 0.5(Y - T)
I = I0 = 1,000
G = G0 = 2,000
X = 600
IM = 400
T = T0 = 2,000
Yp = 10,000
Note: Keep as much precision as possible during
your calculations. Your final answer should be accurate to at least
two decimal places.
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