For the following economy find autonomous expenditure the mu

For the following economy, find autonomous expenditure, the multiplier, short-run equilibrium output, and the output gap. By how much would autonomous expenditure have to change to eliminate the output gap?

C

= 2,500 + 0.8 (Y – T )

I ^p

= 2,500

G

= 3,500

NX

= 300

T

= 3,000

Y*

= 31,400

Instruction: Enter your responses as integer values.

Autonomous expenditure: ____.

Multiplier: ____.

Short-run equilibrium output: _____.

Output gap: _____.

Autonomous expenditure would need to (Click to select) decrease/increase by ____to eliminate the output gap.

Solution

Autonomous expenditure: _8800___

Multiplier: _5___

Short-run equilibrium output: _32000____

Output gap: _600____

Autonomous expenditure would need to decrease by _120___to eliminate the output gap.