Suppose the price level is fixed, the mpc is 0.5, and the gdp gap is a negative $80 billion. to achieve full-employment output (exactly), government should

The government should increase spending by $40 million.

Explanation:

The MPC is given as 0.5.

The recessionary gap is $80 billion, this means to reach full employment level of output, the government needs to increase income by $80 billion.

Increase in GDP =

Increase in GDP = ΔG\ \times\

$80 billion = Δ

$80 billion = Δ

ΔG =

ΔG = $40 billion

well, i can't read it so i'll ask you questions about it : )

if you were a reader and you read the introduction, would you want to read more?

does it start with a question? if so, is it something you would want to read about?

and ask any friends or family for their opinion : )

answerclass conflict;