24. Using the macroeconomic data in #21 above and assuming (i) a full employment economic output of $900 (Be careful: Not $800 anymore!) and (ii) due to budget constraint Congress could only authorize an increase of government spending in the amount of $5 - no more or no less than that!. Now you as the government's chief economic advisor, you will have to compute the amount of taxes that need to be cut to close up the remaining GDP gap. Government now needs to reduce taxes by --_ to close up the remaining GDP gap. $1.25 $1.75 $1.67 $1.50 cannot be computed based on information provided

24. Using the macroeconomic data in #21 above and assuming (i) a full employment economic output of $900 (Be careful: Not $800 anymore!) and (ii) due to budget constraint Congress could only authorize an increase of government spending in the amount of $5 - no more or no less than that!. Now you as the government's chief economic advisor, you will have to compute the amount of taxes that need to be cut to close up the remaining GDP gap. Government now needs to reduce taxes by --_ to close up the remaining GDP gap. $1.25 $1.75 $1.67 $1.50 cannot be computed based on information provided

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section11.B: Algebraic Treatment Of Taxes And Fiscal Policy

Problem 1TY

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