Equal increases in government purchases and in net taxes have equal but opposite effects on the level of real GDP demanded. a. True O b. False
Q: 2. Consider an economy where aggregate demand AD consists of aggregate con- 1000 and government =…
A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…
Q: Quèstion 9 If the government wants to reduce unemployment using fiscal policy, it may do so by…
A: The government can use fiscal policy to influence the market condition and unemployment rate in an…
Q: QUESTION 4 If income tax rates are based on nomir OA their taxes fall as their income f. OB. an…
A: If income tax rates are based on nominal income , as inflation increases , taxpayers will see an…
Q: The formula for the tax multiplier is Select one: O a. -MPC/(MPC + 1). O b. MPC/ (1 MPC). O c. 1/(1-…
A: Tax multiplier assumes that a change in tax would affect the consumption, keeping everything else…
Q: Solve for equilibrium where: • NT = tY = 0.15Y • C = Co + cYD = 20 +0.8YD o lo = 100 o Go = 100…
A: Firm's objective is to maximize the profit and produce where marginal revenue and marginal cost are…
Q: If the multiplier is 5 and government expenditures increase by $200 billic OA) AD shifts left by…
A: Note: “Since you have asked multiple questions, we will solve the first question for you. If you…
Q: Question 3 Given the following information: 1= 150, G = 150, T-150 and C = 150 +0.75(Yd) Which of…
A: Here, given information is, Investment (I): 150 Government spending (G): 150 Taxes (T): 150…
Q: Quèstion 13 T2 A B GDP Refer to the diagram. Discretionary fiscal policy designed to expand GDP is…
A: Answer: To slow down the economy, government uses contractionary fiscal policy, by decreasing…
Q: A reduction in the tax rate might lead to an increase in the growth rate of potential output if... O…
A: Generally a reduction in tax rate is considered the fiscal expansionary role of central government…
Q: If the government wants to reduce unemployment using fiscal policy. it may do so by increasing…
A: Fiscal policy is the policy under which government uses two tools: 1. Increase or decrease the tax…
Q: When the economy is in a recession, tax revenue while spending increases and, as a result, aggregate…
A: Recession is the economic phase where the production level is low and economic activities are…
Q: certain percentage of it. That amount recirculates through the economy and adds additional income,…
A: A tax is a required expense or monetary charge demanded by any administration on an individual or an…
Q: Say, the expenditure multiplier for an economy is 2. An increase in government spending by $300…
A: here we calculate how much economy boost due to government expenditure , so the calculation of the…
Q: Mhe marginal propensity to consume is 0.8, the marginal tax rate is 0.2, and the marginal propensity…
A: In the Keynesian macroeconomics model, the equilibrium level of output in the goods market is…
Q: When is the effect of fiscal policy on real GDP the highest? O a. Steep SRAS curve, Small multiplier…
A: Fiscal policy conducts by the government of a country. The fiscal policy implies changes in…
Q: The formula for the tax multiplier is Select one: O a. -MPC/(MPC+ 1). O b. MPC/ (1 + MPC). O c.…
A: Tax multiplier refers to the amount of tax multiplied or increased out of the fiscal policy…
Q: d. Calculate current equilibrium real current GDP (income) (show your work) e. How much is the…
A: Given: MPC=0.75 Autonomous consumption=$6000 Planned investment=$2000 Planned government…
Q: Suppose the government wishes to eliminate an inflationary gap of $100 billion and the MPC is 0.5.…
A: Answer a) Spending multiplier = 1(1-MPC) =11-0.5=2
Q: What is the formula for the marginal propensity to expend? A aggregate expenditures/A national…
A: The economies around the world tend to have various entities who work with the motive of maximizing…
Q: According to the BEA, in the second quarter of 2012 state and local government spending on goods and…
A: The expenditure approach to deal with a GDP considers the amount of every final service and good…
Q: Consider the bl owing information for a closed economy. Consumption 400 +0.6(Y-T) Таxes 500…
A: Answer: Tax multiplier: it refers to the ratio of change in income to the change in taxes. In other…
Q: To minimize GDP fluctuations, the government should run a budget in times of recession and a budget…
A: A budget surplus occurs when government tax revenue is greater than government spending Budget…
Q: If taxes depend on income and the MPC is 0.8 and tis 0.4, the tax multiplier is Select one: O a.…
A: Given: The MPC is = 0.8 The tax T is = 0.4 To Find: The tax multiplier:
Q: If the government cut expenditures during an expansion O A. it would have to raise the tax rate O B.…
A: Expansion in economics means the increase in production and employment. Because of this, the income…
Q: In each of the following cases, either a recessionary or inflationary gap exists. Assume that the…
A: (a) Real GDP = $100 billion Potential Output = $160 billion Real GDP is less than potential output…
Q: A given change in taxes shifts the aggregate demand curve by than an equal change in government…
A: We know that the Government Spending Multiplier = 11- MPC and the Tax Multiplier = MPC1 - MPC
Q: Assume that taxes depend on income and the MPC is 0.8 and tis 0.4. An increase in taxes of $10…
A: Calculate the tax multiplier as follows: Tax multiplier = -MPC/1-MpC +(MPC*t) =- 0.8/1-0.8+0.8*0.4 =…
Q: Which of the following increases the size of the expenditure multiplier? a. a decrease in the…
A: Expenditure multiplier means how much times income will change due to change in expenditure . It…
Q: Suppose that the government wants to increase real GDP in the short run. To accomplish this it…
A: Increase government expenditures ----- is correct
Q: he AS curve shifts to the left when O All listed options are correct. O the cost of production rises…
A: Supply curve has a direct relationship with price of the good.
Q: Government expenditures, G. and tax revenues, T Refer to the figure Deficit GDP, Real a. The…
A: The entire monetary worth of all the goods and services produced within the geographic limits of a…
Q: rèstion 21 points The economy is in a recession. The government enacts a policy to increase the real…
A: Here, it is given that the government tries to increase GDP by $10 billion when marginal propensity…
Q: 12 The U.S. economy slowed significantly in early 2008 and policy makers were extremely concerned…
A: As there is an increase in cash held by people, they would send them to purchase goods and services…
Q: Quèstion 8 In an open mixed economy, the inflationary expenditure gap may be described as the O A.…
A: Inflationary expenditure gap occurs when the actual equilibrium GDP (i.e., intersection point of AD…
Q: YAS = 742 + 15P - 28 Poil YAD = = 478 - 45P+ 18G Suppose initially, the Poil = $93 per barrel and…
A: Answer - "Thank you for submitting the question. But, we are authorized to solve only 3 subparts.…
Q: Which of the following could NOT be expansionary fiscal policy tool? O A )increasing money supply O…
A: Expansionary fiscal policy tools are adopted by the government of the country.
Q: According to Say's law which of the following statement is correct O a. The equilibrium of national…
A: Suppliers employ labors to produce goods and services in exchange of wages.
Q: Supply, S Real Interest rate Demand Loanable funds (billions of dollars per year) Refer to the graph…
A: If only the real interest rate is taxed rather than the nominal interest, for any given interest…
Q: The permanent income hypothesis and the Ricardian equivalence theorem Select one: O a. are the same…
A: Ricardian proportionality is a monetary hypothesis that says that funding government spending out of…
Q: US President Collin Hawkins is concerned about the economy. He orders the Treasury to issue direct…
A: Answer: Citizens save 20% of their income. MPS marginal propensity to save=20%=0.2 (1).…
Q: Suppose the current equilibrium GDP is less than potential GDP. Which of the following actions could…
A: Suppose the current equilibrium GDP is less than Potential GDP .
Q: Equilibrium real GDP is $400 billion, the MPC = 0.9, and there are no income taxes or imports.…
A: Option (b).
Q: Quèstion 16 If the MPC in the economy is 0.75, government could shift the aggregate demand curve…
A: If MPC is 0.75, the value of multiplier in an economy would be: =1/(1-MPC) =1/(1-0.75) =4
Q: Suppose government spending and lump sum taxes are both reduced by $150 billion. As a result, GDP…
A: A fall in lump sum will increase in the disposable income and the consumption spending of the…
Q: Still with the same data on Macroland, a closed economy with no government sector, and with fixed…
A: Yd = Y - T (T denotes Tax.) Y = Yd + T. GDP Yd Y = Yd + T C = Y - Iplanned Iplanned Iunplanned…
Q: Vou are told that an economy's full-employment level of real output is $800 billion while its…
A: Given the MPC = 0.6 Expenditure multiplier = 1/(1-MPC) = 1/(1-0.6) = 2.5 Tax multiplier = MPC /…
Q: If people expected that a fiscal policy in the form of a tax cut was temporary, then this policy's…
A: This policy would be weaker because it would be temporary.
Q: Which of the following will shifts the SAS curve to the left? O A natural disaster. O An improvement…
A: The short-run aggregate supply curve is the curve that provides information about the total amount…
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- Exercise D24 Compare two policies: a tax cut on income or an increase in government spending on roads and bridges. What are both the short-term and long—term impacts of such policies on the economy?Only typed answer and please don't use chatgpt Why will temporary tax increase be insignificant in reducing consumption expenditures by the amount expected a. Because viewed the tax increase as permanent. b. Because people choose to increase their savings. C become people viewed taco increases temporarily d. Consumption expenditure are not related to level of taxtationCalculate how much output would expand by if the government increased spending by $500 billion and financedthis spending by increasing lump-sum taxes by the same amount.
- Can you assist with solving the following question, I do not understand how the calculation works. Thanks Assume that government purchases decrease by $10 billion, with other factors held constant, including the price level. Calculate the change in the level of real GDP demanded for each of the following values of the MPC. Then, calculate the change if the government, instead of reducing its purchases, increased autonomous net taxes by $10 billion. 0.9 0.8 0.75 0.6Assume that initial GDP is $1,000 and we want to expand it to $1,600. Average MPC for the country is 2/3. What should be the new level of government spending if the initial level is $100. Also how much of a tax policy change reach to the same results?consumers increased consumption by a relatively small amount in 2008 and 2009 because thet believe the tax cuts temporary. true or false
- The government is considering raising the tax rate on labor income. Explain the supply-side effects of such an action and use appropriate graphs to show the directions of change, not exact magnitudes. What will happen to: The supply of labor and why? The demand for labor and why? Equilibrium employment and why? The equilibrium before-tax wage rate and why? The equilibrium after-tax wage rate and why? Potential GDP? Explain your response with specifics and provide examples.The country is experiencing a serious rise in inflation which the government wants to control through fiscal policy. The Government will decrease spending by $20 million and increase taxes by $15 million. The marginal propensity to consume (MPC) is 0.80. What will be the effect on GDP and by how much? A recessionary gap is how much GDP needs to increase from the current GDP to achieve full employment. Let's say that we are experiencing a recessionary gap of $36 million. Also assume that the MPC equals .80. The government decides to decrease taxes to close the recessionary gap. How much will be the tax decrease? An inflationary gap is how much GDP needs to decrease from the current GDP to maintain employment while avoiding inflation. Let's say that we are experiencing an inflationary gap of $200 million. The government decides to increase taxes. Assume the MPC equals .80. How much will the tax increase be? The government wants to achieve a balanced budget. It therefore increases…Will increased government spending always lead to crowding out if the economy is not at full employment? (Consider the case in which the increased spending involves transfer payments rather than the purchase of goods and ser vices.)
- True False and a 1 sentence explaination please thanks. D) If we assume marginal propensity to consume (b) is 80 % and marginal tax rate (t)is 15 %, and marginal propensity to import is 18 %, then 25 billion increase government expenditure will increase national income by 100 billion.What is the effect of a government budget surplus on the real interest rate and investment?A government budget surplusO A. lowers, crowds outOB. lowers, increasesOC. raises, increasesOD. raises; crowds outthe real interest rate andinvestment.The country is experiencing a serious rise in inflation which the government wants to control through fiscal policy. The Government will decrease spending by $20 million and increase taxes by $15 million. The marginal propensity to consume (MPC) is 0.80. What will be the effect on GDP and by how much? A recessionary gap is how much GDP needs to increase from the current GDP to achieve full employment. Let us say that we are experiencing a recessionary gap of $36 million. Also assume that the MPC equals .80. The government decides to decrease taxes in order to close the recessionary gap. What will be the tax decrease? An inflationary gap is how much GDP needs to decrease from the current GDP to maintain employment while avoiding inflation. Let us say that we are experiencing an inflationary gap of $200 million. The government decides to increase taxes. Assume that the MPC equals .80. What will be the tax increase? d. The government wants to achieve a balanced budget. It, therefore,…
