Law
Country A has determined that their full-employment level of national income is $840 at an unemployment rate of 6%. Country A was producing at this point in January 2022, but recent measures of output indicate that Country A's present level of national income is $610 with unemployment now at 9%. Further economic analysis has determined that when national income in Country A rises by $15, consumption in Country A increases by $3.1) What type of output gap is Country A experiencing? (1pt)2) The increase in unemployment is an increase in what type of unemployment? (1pt)3) A worker for Country A's central bank, Ms. X, believes it is best to reduce this gap through monetary policy. Based on the above information, what type of open market operations would Ms. X suggest Country A's bank undertake? (Ipt). Use a liquidity- preference diagram to show what impact this open-market operation policy will have on interest rates. Also explain what impact the policy will have on output, unemployment, and inflation.4) In opposition to Ms. X. Ms. Z believes this the government should close this output gapusing fiscal policy. Based on Ms. Z's recommendations,a. What is the size of the multiplier? (2pts) b. If government transfer payments remain unchanged, by how much will G need to change to close this output gap? (for now, assume there is no crowding out effect)(2pt) c. What is the size of the tax multiplier? (2pts) d. If G remains unchanged, by how much will government transfer payments need tochange to close this output gap? (for now, assume there is no crowding out effect)