Answer:
A)There is a recessionary gap of $25 billion.
Step-by-step explanation:
Full Employment Consumers Investors Total Private Total Saving
Income (Output) Desire to Desire to Spending
Spend Spend
$500 $300 $250 $___ $___
600 375 250 $___ $___
700 450 250 $___ $___
800 525 250 $___ $___
Total Private spending = Consumers desire to spend + Investors desire to spend
Total savings = Income - Total private spending
Using these formulas :
Solution Table
Full Employment Consumers Investors Total Private Total Saving
Income (Output) Desire to Desire to Spending
Spend Spend
$500 $300 $250 550 -50
600 375 250 625 -25
700 450 250 700 0
800 525 250 775 25
If the full-employment level of income (YF) in Table 9.2 is $800 billion So, There is a recessionary gap of $25 billion. Since total saving is $25
So, Option A is true .