The economy of Morin is shown in the figure below.  a. If potential GDP (LAS) is $525, and the economy is presently in equilibrium, then there is a(n) gap of $ billion. b. In order to close this gap aggregate demand must increase by $ billion. c. If every $1 change in government spending leads to a $4 change in aggregate demand, government spending must increase by $ billion. d. Suppose that initially government had a balanced budget. If government increases its spending as in part (c) and tax revenues are 0.2 of real GDP, what will be the government’s real budget surplus/deficit at full-employment equilibrium? The government budget would have a of $ billion.

Suppose that the federal budget is balanced when GDP is at potential GDP. If equilibrium GDP falls below potential, please explain how and why government transfer payments would change; how and why tax receipts would change; how and why the budget would change.

Consider the following economy:(1) C = 1000 + 0.3 (Y - T)(2) I = 700(3) G = 500(4) T = 400The government decided to run a balanced budget. By how much would taxes have to increase or decrease? (

If the total of government spending plus government transfer payments is less than tax revenues, which of the following must be true?ResponsesThe national debt will increase.The national debt will increase.There is a recessionary gap.There is a recessionary gap.The government budget is in surplus.The government budget is in surplus.The velocity of money will increase.The velocity of money will increase.The money multiplier will increase.

Consider the following economy:(1) C = 1000 + 0.3 (Y - T)(2) I = 700(3) G = 500(4) T = 400Given what you know from the previous question, i.e. the government is changing spending to reach balanced budget. Find the new income of equilibrium.

If private domestic saving and investment remain constant, an increase in the government budget deficit will Group of answer choicesreduce net exportsreduce national savingincrease net capital inflowsall of the other answers