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is this a recessionary or inflationary gap. aggregate supply curve is horizontal, change in real GDP arising from a shift of the aggregate demand curve = the size of the shift of the curve. Calculate both the change in government purchases of goods and services and the change in government transfers necessary to close the gap.
real GDP = $180billion, potential output = $100billionn and the marginal propensity to consume is .8
15 years ago

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