economics question as attached

The graph above shows equilibrium level of GDP (in $ billions). Assume that full employment is

achieved at a level of GDP of $200 billion.

(a) Define the government expenditure multiplier?

(Marks: 2)

(b) Is there an inflationary or a deflationary gap, and what is its size?

(Marks: 2)

(c) By how much would government expenditure have to be changed in order to close this

gap (assuming no shift in other injections or withdrawals)?

(Marks: 2)

Clearly explain your answer to each part.

cd, W, JGDP=cd+W

E=AD1=cd+J

190

160200