f the consumption function is C= 800 +0.6(Y-T), output, Y = $4,600 and net taxes, T, = $100, then consumption = $(Round your response to the nearest whole number.) ( I'm not sure please confirm this, I'm in hurry!!!
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If the consumption function is C= 800 +0.6(Y-T), output, Y = $4,600 and net taxes, T, = $100, then consumption = $(Round your response to the nearest whole number.)
( I'm not sure please confirm this, I'm in hurry!!!)
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- Why will a temporary tax increase be insignificant in reducing consumption expenditures by the amount expectedSuppose the government reduces taxes by 50,000,000, that there is no crowding out, and that marginal propensity to consume is 0.9. What is the total amount of additional economic activity that results from this tax cut?Assume that the consumption function is given by C = 150 + 0.85(Y – T)and the tax function is given by T = t0 + t1Y where C = Consumption, Y = Total output/income, t0 = Autonomous/fixed tax and t1 = Tax rate. If t0increases by 1 unit, then explain whether consumption will be increased or decreased, and how much?
- Assume that government purchases decrease by $10 billion, with other factors held constant, including the price level. Calculate the change in the level of the real GDP demanded for each of the following values of the MPC. Then, calculate the change if the government, instead if reducing its purchases, increased autonomous net taxes by $10 billion. a. 0.9 b. 0.8 c. 0.75 d. 0.6Suppose that the consumer’s consumption demand function is given by Cd(r) = 0.8(Y−T)+10−10r. Investment is Id(r) = 20 − 10r, government expenditure is G = 10, and tax is T = 10. The output supply is given by Ys(r) = 100 + 100r. Derive the output demand curve. What is the equilibrium GDP (income) and interest rate? Suppose that government expenditure increases by 10 units while tax also increases by 10 units. How will GDP change? What is the multiplier?If a lump-sum income tax of $30 billion is levied and the MPS is .4, the consumption schedule will shift ______?
- 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.)Suppose a closed economy has an aggregate consumption function given by C = 50 + 0.50Yd and generates $2500 output and income in equilibrium. Suppose also that the government spends 400 and imposes a lump-sum tax of 100. What is the level of intended investment?Question #10 - Suppose the government wishes to eliminate an inflationary gap of $100 billion and the MPC is 0.50. How much must the government cut its spending? Instead of decreasing government spending by the amount you calculate, what would be the effect of the government increasing taxes by this amount?
- Suppose the consumption function is given by C(Y)=60+0.8(Y-T) where Y represents output and T stands for net taxes. Suppose further that the level of investment, I, is 400, the level of government expenditure, G, is 300, and net taxes, T, are 200. What is the value of the marginal propensity to save? a. 5 b. 0.2 c. 0.8 d. 1(Changes in Government Purchases) 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 0.6Suppose a closed economy has an aggregate consumption function given by C = 100 + 0.75Yd and generates $3000 output and income in equilibrium. Suppose also that the government spends 300 and imposes a lump-sum tax of 50. What is the level of intended investment? (round your answer to the nearest whole value)
