Look at the following figure. If the economy is at point E, there is a(n) _____ gap, and _____ unemployment. gap 2.jpg

The short-run aggregate supply curve will shift to the right:

Given a marginal propensity to consume of 0.80, how much of increase/decrease in Government spending is needed to move the economy to the long run equilibrium (potential output)? Test 3-2.png

Given a marginal propensity to consume of 0.90, how much of increase/decrease in Government spending is needed to move the economy to the long run equilibrium (potential output)? Test 3-1.png

Consumer spending will likely fall if:

The short-run aggregate supply (SRAS) curve is upward sloping because of

If the marginal propensity to consume (MPC) is 0.80 and the government increases taxes by $15 billion, what would happen to real GDP?

Which of the following will shift aggregate demand to the left?

An inflationary gap can be closed when _____ wages shift the _____.

What is potential output in an economy?