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Part C The following equations characterize an open economy in billions of dollars. C = 100...

Part C The following equations characterize an open economy in billions of dollars. C = 100 + .6 (Y – T) T = 40 I = 48 G = 64 X = 76 M = 20 + .15Y(j) Suppose the full employment level of real GDP is $400. Does a recessionary gap or an inflationary gap exist? How can the government eliminate the gap by altering government expenditures? How can the government eliminate the gap by altering taxes? Note: State the amount and direction (increase or decrease) of taxes or government expenditure needed to eliminate the gap.

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Rahul Sunny answered 1 year ago
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