In the fictional country of Zandora, the economy is currentl…

In the fictional country of Zandora, the economy is currently producing 3,500 trillion dollars, while the potential output is 4,100 trillion dollars. The government wants to use tax policy to help close this gap, and the marginal propensity to consume (MPC) is 0.8. Should the government increase or decrease taxes, and by how much?

In the fictional country of Eldoria, the economy is currentl…

In the fictional country of Eldoria, the economy is currently producing 5,600 trillion dollars, while the potential output is 5,000 trillion dollars. The government wants to use transfer spending to help close this gap, and the marginal propensity to consume (MPC) is 0.75. Should the government increase or decrease transfer spending, and by how much?

In the fictional country of Lunaria, the economy is producin…

In the fictional country of Lunaria, the economy is producing 5,800 trillion dollars in 2036, while the potential output is 6,200 trillion dollars. Which type of gap does this create, and without government intervention, does the SRAS curve shift to the right or left to close the gap?