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Table 12-12
TABLE IS IN THE FILE
Real GDPConsumptionPlanned InvestmentGovernment PurchasesNet Exports$4,000$3,500$350$450-$1005,0004,300350450-1006,0005,100350450-1007,0005,900350450-100
Refer to Table 12-12. Using the table above, answer the following questions. The numbers in the table are in billions of dollars.
a.What is the equilibrium level of real GDP? (1pt)b.If potential GDP is $4,000 billion, is the economy at full employment?
Why or why not? Briefly explain your reasoning.
(2pts)
c.If the economy is not at full employment, by how much should government spending increase or decrease so that the economy can move to the full employment level of GDP?
Show your work.
(2pts)