Question

GDP	C	Ig	G	X	M
300	250	40	20	30	10
350	290	40	20	30	10
400	330	40	20	30	10
450	370	40	20	30	10
500	410	40	20	30	10
550	450	40	20	30	10
600	490	40	20	30	10
650	530	40	20	30	10

a). Calculate the MPC, MPS, and the multiplier

b). If full employment GDP is 600:

1). Is there an inflationary gap or a recessionary gap?

2).How much would government spending need to change to bring about the necessary change to return the economy to full employment equilibrium?

3).Alternatively, to a change in G, how much would taxes have to change to bring about the necessary change in to return the economy to full employment equilibrium?

c).If full employment GDP is 350:

1).Is there an inflationary gap or recessionary gap?

2).How much would spending need to change to bring about the necessary change to return the economy to full employment equilibrium?