In each of the following cases, either a recessionary gap or inflationary gap exists. Assume that the aggregated supply curve is horizontal so that the change in real GDP arising from a shift of the aggregated demand curve equals the size of the shift of the curve. calculate the change in government purchases of goods & services and the change in gov trans nec to close the gap. real gdp=$250Billion, potential output=$200billion & maginal propensity to consume is .5

Question

In each of the following cases, either a recessionary gap or inflationary gap exists.  Assume that the aggregated supply curve is horizontal so that the change in real GDP arising from a shift of the aggregated demand curve equals the size of the shift of the curve. calculate the change in government purchases of goods & services and the change in gov trans nec to close the gap. real gdp=$250Billion, potential output=$200billion & maginal propensity to consume is .5