Question

An economy is operating with output $400 billion below its natural level

Answer 1

Meaning of underdevelopment. --Neha Gupta. The term underdevelopment refers to that state of an economy where levels of living of masses are extremely low due to very low levels of per capita income resulting from low levels of productivity and high growth rates of population.

Answer 2

Answer:

An economy is operating with output $400 billion below its natural level, and fiscal policymakers want to close this recessionary gap. The central bank agrees to adjust the money supply to hold the interest rate constant, so there is no crowding out.