Question

The economy’s current level of equilibrium gdp is $780 billion. the full-employment level of gdp is $800 billion. the multiplier is 4. given those facts, we know that the economy faces ___________ expenditure gap of ________. a recessionary; $5 billion an inflationary; $20 billion a recessionary; $10 billion a recessionary; $20 billion an inflationary; $5 billion an inflationary; $10 billion

Answer 1

The answer is $20 billion a recessionary. The difference between the current level and the full employment level gdp is  $20 billion. This is recessionary because the targeted gdp was not met. It is not inflationary because inflation is about the increase of prices of products and gdp is a national economic indicator used to tell an overall increase or decrease in the economic situation.

Answer 2

Answer:

The correct answer is "a recessionary; $5 billion"

Explanation:

The multiplier effect tells us that for every unit that varies the GDP, it will be affected by 4 units concerning the level of full employment of the GDP. Given that the current level of equilibrium GDP is less than the full employment level of GDP, this indicates that the economy is in recession for a recessive expenditure of $5 billion.

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