a. The economy is experiencing a recessionary gap because the potential GDP is greater than the Real GDP.
bc. The minimum change required to shift the aggregate demand curve to close the output gap is 500 and 125.
a. The economy is experiencing a recessionary gap because the potential gross domestic product is higher than the Real gross domestic product.
Potential GDP=500
Actual GDP=400
Potential GDP > Actual GDP
b. Minimum change
Multiplier= 1/(1 - MPC)
Multipl,ier= 1/(1 - 0.8)
Multiplier = 1/0.2
Multiplier= 5
Minimum change=(500-400)×5
Minimum change=500
c. Minimum change
Tax multiplier = MPC/(1 - MPC)
Tax multiplier= 0.8/(1 - 0.8)
Tax multiplier= 4
Minimum change=500/4
Minimum change=125
Inconclusion the economy is experiencing a recessionary gap because the potential GDP is greater than the Real GDP.
Learn more about GDP here:https://brainly.com/question/15261813
