Question

g The full-employment level of output is $3000 above the current level of output. How much should the government change government expenditures in order for the new equilibrium to be equal to the full-employment level of output

Answer 1

Answer: hello some part of your question is missing attached below is the missing part

answer = $600

Step-by-step explanation:

First step : determine the value of MPC and MPS

MPC = ΔC / (14000-13000) = (11320-10520) / 1000 = 0.8

Given that MPS = 1 - MPC = 0.2

spending multiplier = 1/MPS = 1/0.2 = 5

Gap = +$3000

To determine how much the government should change the government expenditures

= Gap / spending multiplier

= 3000 / 5

= $600