The control zone in which response actions should be limited tot he shortest possible entry time is the hot zone?
1 answer:
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Answer: Option (b) is correct.
Explanation:
Given that,
short-run equilibrium output = 10,000
income-expenditure multiplier = 10
potential output (Y*) = 9,000
Expenditure multiplier =
10 =
Slope of AE function = 0.9
slope of AE = MPC (1-t) t =0,
MPC = 0.9
Delta Y (DY) = 1000
government expenditure multiplier ⇒ = 10
Delta G =
=
= 100
Government purchases must be Decrease by 100.