An economy is experiencing a high rate of inflation. The government wants to reduce consumption by $15 billion to reduce inflationary pressure. The MPC is 0.60 By how much should the government raise taxes to achieve its objective?
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- Actual output is $2,000, potential output is $2,500, and the marginal propensity to consume (MPC) is 0.8. Which will return the economy to potential output? Increase taxes by $125. Increase government spending by $500. Decrease taxes by $125. Increase government spending by $125.If the MPC in an economy is .6, the government could shift the aggregate demand curve to the right by $50 billion by: reducing worthless government expenditures by $125 billion. reducing worthless government expenditures by $20 billion. increasing taxes by $50 billion. increasing worthless government expenditures by $20 billion. None of the available are correctIf the marginal propensity to consume (MPC) is 0.80, and if policy makers wish to increase real GDP $200 million, then by how much would they have to change taxes? A.decrease by $240 million. B.decrease by $160 million. C.decrease by $180 million. D.decrease by $50 million.
- Question #12 - Suppose the U.S. economy is troubled by inflation. The economy is in equilibrium at a real GDP of $15.5 trillion, the MPC is 0.90, and the full-employment output is $15 trillion. If the government decides to eliminate the inflationary gap by cutting government spending, what should be the size of the cut?If the MPC in an economy is 0.6, government could shift the aggregate demand curve rightward by $30 billion by Multiple Choice decreasing taxes by $20 billion. increasing government spending by $20 billion. increasing government spending by $18 billion. decreasing taxes by $30 billion.If the MPC in an economy is .8, government could shift the aggregate demand curve rightward by $100 billion by: increasing government spending by $25 billion. increasing government spending by $80 billion. decreasing taxes by $25 billion. decreasing taxes by $100 billion.
- true or false and why The economy is at the Keynesian equilibrium. Assuming that taxes are zero, a decrease in the marginal propensity to consume decreases unplanned inventories in the short run.if the MPC in an economy is .80 government could shift the aggregate demand curve leftward by $48 billion by A. increasing taxes by $12 billion B. reducing government expenditures by $4 billion C. increasing taxes by $9.6 billion D reducing government expenditures by $48 billionAt an intial point on the aggregate demand curve, the price level is 100, the real GDP is $18 trillion. After the price level rises to 110, however there is an upward movement along the aggregate demand curve, and real GDP declines to $14 trillion. If total planned spending declines by $200 billion in response to the increase in the price level, what is the MPC in this economy?
- Suppose actual real GDP is $13.56 trillion, potential real GDP is $12.34 trillion, and the marginal propensity to consume is 0.74. If we ignore price effects, and if the government already decided to increase its spending by $1.90 trillion, by how many trillions of dollars should the government change its lump sum taxes to fix the gap? (Round this to two digits after the decimal and enter this value as either a positive value or a negative value without the dollar sign.)Assume the following - the federal government seeks to invest in roads, bridges, and waterways in the amount of $18 Billion, which shifts Aggregate Demand by $29 Billion. Based upon the foregoing information, the Marginal Propensity to Consume (MPC) is: (round only to two decimal places) Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Suppose actual real GDP is $9.06 trillion, potential real GDP is $6.42 trillion, and the marginal propensity to consume is 0.59. If we ignore price effects, by how many trillions of dollars should the government change its lump sum taxes to fix the gap? (Round this to two digits after the decimal and enter this value as either a positive value or a negative value without the dollar sign.)