Consider an economy in which investment is $200, government purchases are $500, net exports are $30, and the price level is fixed. Taxes vary with income, and as a result, the consumption schedule looks like that shown in the following table. Fill in the missing values.
Graph the aggregate expenditure graph using the above data.
This is the graph with Aggregate Expenditures on the Y axis and Real GDP on the x axis. Start with a forty five degree line.
Suppose that full employment comes at GDP=$1,480.
Is the economy in an inflationary or recessionary gap?
What action would you take to close the gap?
I am looking for the amount you would cut/increase taxes or decrease/increase government spending.
Extracted text: Total Real (Х- IM) Expenditure (TE) GDP Тахes DI C I G 1,360 320 1,040 810 200 500 30 1,480 360 1,120 870 200 500 30 1,600 400 1,200 930 200 500 30 1,720 440 1,280 990 200 500 30 1,840 480 1,360 1,050 200 500 30