Using the aggregate expenditures model, answer the questions below to show how government fiscal policy could eliminate either a recessionary expenditure gap or an inflationary expenditure gap. 6000 5000 4000 Aggregate expenditures (billions of dollars) 3000 2000 Full employment AEO 1000 0 45° 1000 2000 3000 4000 5000 6000 Real GDP (billions of dollars) Tools 1 Gap
Using the aggregate expenditures model, answer the questions below to show how government fiscal policy could eliminate either a recessionary expenditure gap or an inflationary expenditure gap. 6000 5000 4000 Aggregate expenditures (billions of dollars) 3000 2000 Full employment AEO 1000 0 45° 1000 2000 3000 4000 5000 6000 Real GDP (billions of dollars) Tools 1 Gap
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter30: Government Budgets And Fiscal Policy
Section: Chapter Questions
Problem 30RQ: Under what general macroeconomic circumstances might a government use expansionary fiscal policy?...
Question
Using the aggregate expenditures model, answer the questions below to show how government fiscal policy could eliminate either a recessionary expenditure gap or an inflationary expenditure gap.
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