Suppose real gdp is 13.2 and potential real gdp is 14.0, with a gap of $800 billion. The government purchases multiplier is 5.0, and the tax multiplier is 4.0. How much will government purchases need to be increased to bring economy to equilibrium at potential GDP?

$160 billion

Step-by-step explanation:

The government purchases multiplier refers to the increase in real GDP in dollar terms as a result of a dollar of government purchases in the economy. For instance, if the multiplier is 5 and the government spends $10, real GDP increases by: 5 * 10 = $50

The gap here is $800 billion. Given a government purchases multiplier of 5.0, the amount that the government needs to spend is:

= Gap / Multiplier

= 800 / 5

= $160 billion

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step-by-step explanation:

always plug in x. in this case, x equals 4.

i'm going to first solve 4(2+3x)

1) 4(2+3(4)) use pemdas to solve.

i'm going to multiply whats in the parenthesis first, so 3 times 4=12.

2)4 (2+12) i'm then going to multiply 4 by both numbers in the parenthesis (because multiplying comes before adding)

4 times 2= 8.   4 times 12= 48

4) (8+48)= 56 (answer)

i'm then going to solve 8+12x and plug in 4 for x.

1) 8 +12(4)

multiplying comes before adding, so i'm gonna multiply 12 and 4.

12 times 4= 48.

2) 8+48=56

both equal the same!