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Question 1

The graph below shows the AD-AS diagram for Norway.

What type of the GDP gap is observed in Norway?

 

Hint


Question 2

The graph below shows the AD-AS diagram for the US.

What type of fiscal policy should the government of the US be implementing to bring the economy to the long-run equilibrium?

 

Hint


Question 3

The graph below shows the AD-AS diagram for Mexico.

How big is the recessionary gap?

 

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Question 4

The graph below shows the AD-AS diagram for Mexico.

Suppose that the government expenditure multiplier is equal to 2.

By how much should the government increase government expenditures (G) in order to close this recessionary gap?

 

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Question 5

The graph below shows the AD-AS diagram for Norway.

How big is the inflationary gap?

 

Hint


Question 6

The graph below shows the AD-AS diagram for Slovenia.

Suppose that the government expenditure multiplier is equal to 3.

By how much should the government decrease government expenditures (G) in order to close this inflationary gap?

 

Hint