The real GDP for the country of Recessionton is 4300 at full employment. However, current GDP in Recessionton is equal to PAE = 940 + 0.6Y.
a. Using the Keynesian model, calculate and illustrate and explain the current situation in Recessionton.
b. How much should the Government of Recessionton increase its budget expenditure by to bring Recessionton to a situation where actual GDP is equal to potential GDP?