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Refer to Table 9.2. (Data are expressed in billions of dollars).

Full Employment Income (Output) Consumers Desire to Spend Investors Desire to Spend Total Private Spending Total Saving
$500 $300 $250 $___ $___
600 375 250 $___ $___
700 450 250 $___ $___
800 525 250 $___ $___

If the full-employment level of income (YF) in Table 9.2 is $800 billion

A. There is a recessionary gap of $25 billion.

B. The economy is in equilibrium.

C. There is an inflationary gap of $250 billion.

D. There is a recessionary gap of $275 billion.

Answer :

Answer:

A)There is a recessionary gap of $25 billion.

Step-by-step explanation:

Full Employment   Consumers   Investors    Total Private    Total Saving

Income (Output)     Desire to      Desire to        Spending

                               Spend             Spend

$500                       $300                  $250           $___            $___

600                           375                   250             $___            $___

700                           450                   250             $___            $___

800                           525                   250            $___             $___

Total Private spending = Consumers desire to spend + Investors desire to spend

Total savings = Income - Total private spending

Using these formulas :

Solution Table

Full Employment   Consumers   Investors    Total Private    Total Saving

Income (Output)     Desire to      Desire to        Spending

                               Spend             Spend

$500                       $300                  $250           550            -50

600                           375                   250             625            -25

700                           450                   250             700              0

800                           525                   250            775              25

If the full-employment level of income (YF) in Table 9.2 is $800 billion So, There is a recessionary gap of $25 billion. Since total saving is $25

So, Option A is true .

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