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- Nigeria is currently experiencing a recessionary gap of approximately 24.6 billion in their currency. Its MPC is approximately 0.8. How much would the government have to change taxes to close the gap? Assume a horizontal SRAS. If the government should decrease taxes, enter a negative answer. one decimal placeHow is it possible for the economy to have an inflationary gap? a. GDP is falling at full employment. b. Equilibrium is at a GDP level above full employment. c. GDP is rising at full employment. d. Equilibrium is at a GDP level below full employment. e. Equilibrium is at a GDP level equal to full employment.Suppose actual real GDP is $13.37 trillion, potential real GDP is $12.33 trillion, and the marginal propensity to consume is 0.62. If we ignore price effects, by how many trillions of dollars should the government change its spending 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.)
- If the MPC in the economy is 0.75, the government could shift the aggregate demand curve rightward by $30 billion by cutting taxes by $10 billion. True FalseIf 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 correctDetermine whether each of the following, other factors held constant, would, in the short run, lead to an increase, a decrease, or no change in the level of real GDP demanded: a. A decrease in government purchases b. An increase in net taxes c. A reduction in transfer payments d. A decrease in the marginal propensity to consume.
- The marginal propensity to consume (mpc) is 0.8. In addition, government spending increases by $200 billion and lump sum taxes fall by $100 billion. What is the total change in the equilibrium real GDP, if the price level is fixed in the short run?The amount by which equilibrium real GDP exceeds full-employment GDP is known as (2pts) Question 12 - The amount by which equilibrium real GDP exceeds full-employment GDP is known as stagflation employment. a recessionary gap. an inflationary gapConsumer spending fell significantly at the start of the pandemic by 13.6%, but increased by 5.6% in June. Economists are predicting that in the next few months consumer spending may be positive but at a much lower rate than 5.6% as additional money for unemployment is no longer available, unemployment remains high, and uncertainty of the future. Consumer spending is closely watched since it is a primary predictor of how quickly the economy will recover from the current recession. How do you expect consumer spending might change over the next few months? Why? How has your spending been changing? Are you expecting to make any big purchases in the near future?
- 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 billionCalculate marginal propensity to consume from the following Equilibrium income $350 Consumption expenditure at zero income $20 Investment $50Suppose actual real GDP is $7.87 trillion, potential real GDP is $14.36 trillion, and the marginal propensity to consume is 0.61. 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.)