5- In the Keynesian range of the AS curve, increases in taxes will raise unemployment- true 16- If the MPC is .95 and taxes are increased by $20, AD will increase by $380- true 17- If Y* is more than Yfe, the economy is in the classical range of the AS curve- true
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hi, posting this again. will you let me know if these are correct?
15- In the Keynesian range of the AS curve, increases in taxes will raise
16- If the MPC is .95 and taxes are increased by $20, AD will increase by $380- true
17- If Y* is more than Yfe, the economy is in the classical range of the AS curve- true
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- hi, posting this again. will you let me know if these are correct? 18- tax cuts directed at higher income individuals will do more to stimulate the economy than those directed to lower income individuals, in the keynesian model.-true 19- growing federal budget deficits are a problem cased by kenynesian economics- false 20- Keynes advocated using government deficits in times of depression -truecan you tell me if these answers are correct? they are true/false. 14) Crowding out, when it occurs, involves increasing interest rates. -fals 15) In the Keynesian range of the AS curve, increases in taxes will raise unemployment- trueSuppose the marginal propensity to consume in an economy is 0.9. What would be the Keynesian multiplier in this economy? (Express your answer as a whole number – no fractions or decimals)
- The economy is experiencing a contraction (recessionary gap) of $400 billion. What government spending stimulus would you recommend to move the economy back to full employment if the MPC is 0.75? Would your policy be any different if the MPC were 0.66?The economy is experiencing a $225 million inflationary gap. If the government decided to solve this macroeconomic disequilibrium using a change in taxes, would you recommend an increase or decrease in taxes? If the MPC =0.9, what magnitude of tax change would be appropriate? 1) The economy is experiencing a recessionary gap of $30 billion. If the MPC=0.75, what government spending stimulus would you recommend to move the economy back to full employment? If the MPC=0.66The graph below depicts an economy where an increase in aggregate demand has caused inflation. Assume the government decides to conduct fiscal policy by decreasing government purchases to restore full-employment GDP. Instructions: Enter your answer as a whole number. If you are entering a negative number include a minus sign. a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? $ -160 Numeric ResponseEdit Unavailable. -160 incorrect. billion b. If the MPC is 0.9, how much do government purchases need to change to shift aggregate demand by the amount you found in part a? $ billion Suppose instead that the MPC is 0.8. c. How much does aggregate demand and government purchases need to change to restore the economy to its long-run equilibrium? Aggregate demand needs to change by $ billion and government purchases need to change by $ billion.
- Consider the Keynesian Liquidity Constrained consumer (LCC). • (viii) What is the marginal propensity to consume out of temporary income? What does it depend on? (ix) What is the marginal propensity to consume out of permanent income? Does it depend on the same factors you mentioned in the previous question?What will happen to Real GDP if autonomous spending rises and the economy is operating in the horizontal section of the Keynesian AS Curve?. Explain your answer with appropriate illustrations. QUESTION 2 How is Keynes position different from classical position with respect to wages, prices, and Say’s law?The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the government decides to conduct fiscal policy by changing taxes to reduce the burden of this recession. Fiscal Policy Instructions: Enter your answer as a whole number. If you are entering a negatlve number Include a minus sign. a. How much does aggregate demand need to change to restore the economy to its long-run equilibrilum? $, billion b. If the MPC is 0.6 , how much do taxes need to change to shift aggregate demand by the amount you found in part a? $, billion Suppose Instead that the MPC is 0.8 . c. How much does aggregate demand and taxes need to change to restore the economy to Its long-run equilibrlum? Aggregate demand needs to change by $ billion and taxes need to change by $ billion.
- Let's say you are the chair of economic advisors to the president. Assume that the economy, as depicted in an AD/AS framework is at: potential (full employment) output, The intersection of the SRAD, SRAS, and LRAS, all intersect at the level of potential (full employment) output and a corresponding price level ( or an acceptable rate of inflation). The economy's mpc is .75, which is presumed to remain constant. Now, global problems emerge, and the US decided to produce many new fighter jets immediately to the region under duress. The new jets will cost $55 b., and other expenditures by the government cannot be cut. The president is concerned that the new expenditures will create an inflation, but needs to produce the new jets immediately. What policies would you propose, that would enable the country to produce the new jets, without creating an inflation? Use the AD/AS framework to illustrate your answer. Assume any taxes are lump sum taxes. Specify the spending and taxing…Which of the following statements about Fiscal Policy is INCORRECT (a) In order to combat inflation, the South African Reserve Bank must apply a contractionary fiscal policy; (b) A contractionary fiscal policy can result in higher levels of unemployment; (c) Expansionary fiscal policy will increase the budget deficit; (d) The application of fiscal policy will have no effect on aggregate supply in the AD‐AS model. If the inflation rate is 6% and Susan receives a 6% increase in income, then, over the year, Susan’s: (a) Real and nominal income both remain unchanged; (b) Real and nominal income both rise; (c) Real income rises but nominal income remains unchanged; (d) Nominal income rises but real income remains unchanged. Given the import function, Z = 300 + 2/3Y, which of the following statements is correct? The marginal propensity to save is 1/3; The induced component is 300; 2/3 is the proportion of any income spent on imports; None of…Given a simple Keynesian spending multiplier of 2, how will GDP (Y) change when business investment increases by $15 billion, exports increase by $5 billion, and government spending drops by $10 billion? Y increases by $20 billion. Y decreases by $20 billion. Y decreases by $10 billion. Y remains unchanged.
