Suppose the Japanese economy has been experiencing slow growth. As a result, the Prime Minister, who thinks John Maynard Keynes
was the greatest economist ever, has decided to increase government spending. The Prime Minister asks the head of the economic council to determine the increase in government spending necessary to bring the economy to full employment. Assume there is a GDP gap of 1 trillion yen and the marginal propensity to consume (MPC) is 0.60. What advice should the head of the economic council give the Prime Minister
To determine the recessionary gap, it equals 1 trillion yen divided by 2.5, resulting in 0.4 trillion yen. Explanation: The problem states a GDP gap of 1 trillion yen with a marginal propensity to consume (MPC) of 0.60, signifying the need to boost government spending to close the gap, indicating a recessionary gap due to actual GDP falling short of potential GDP. The government's spending will stimulate the economy. With an MPC of 0.6, the multiplier is calculated as: = 1/1-MPC = 1/1 - 0.6 = 1/0.4 = 2.5. The necessary increase in government spending to close the recessionary gap can be derived from: ∆Y = ∆G × Multiplier 100 = ∆G × 2.5. Hence, ∆G = 100/2.5 = 40. Therefore, the recessionary gap amounts to 1 trillion yen divided by 2.5, which equals 0.4 trillion yen.
The opportunity cost amounts to $532,000. This represents the cost of the most preferable alternative that was not selected. In this case, rejecting the investment project meant foregoing the potential return of $532,000.
En base a este escenario se puede afirmar que Donald tiene derecho aDaños compensatorios. Esto es una demanda que cubre la pérdida que la parte que no infringe incurrió como resultado de la ruptura del contrato. En este escenario, el empleador de Donald incumplió el contrato al despedir a Donald antes de los doce meses. Por lo tanto, Donald puede demandar por daños compensatorios que serían la cantidad de dinero que habría ganado en el resto de los doce meses.
