The figure given below depicts macroeconomic equilibrium in a closed economy. Assume that the spending multiplier in this economy is 1.5.
Figure 10.5

-Refer to Figure 10.5. Assume that there is a recessionary gap that can be closed by a $500 increase in planned aggregate expenditures. If the economy is initially in equilibrium with a real GDP level of $900, then the target or potential level of real GDP must be:

Question

The figure given below depicts macroeconomic equilibrium in a closed economy. Assume that the spending multiplier in this economy is 1.5.
Figure 10.5
 
-Refer to Figure 10.5. Assume that there is a recessionary gap that can be closed by a $500 increase in planned aggregate expenditures. If the economy is initially in equilibrium with a real GDP level of $900, then the target or potential level of real GDP must be:

Quizplus · Accepted Answer

The Answer of The figure given below depicts macroeconomic equilibrium in a closed economy. Assume that the spending multiplier in this economy is 1.5.
Figure 10.5
 
-Refer to Figure 10.5. Assume that there is a recessionary gap that can be closed by a $500 increase in planned aggregate expenditures. If the economy is initially in equilibrium with a real GDP level of $900, then the target or potential level of real GDP must be:

The Figure Given Below Depicts Macroeconomic Equilibrium in a Closed