If the AD excess is $300 billion and the MPC is 0.75, Instructions: Round your responses to one decimal place. a. how much fiscal restraint is desired? $ billion b. by how much do income taxes have to be increased to get that restraint? $ billion c. alternatively, how much should government reduce its spending to achieve the target? billion
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- If the AD shortfall is $700 billion and the MPC is 0.95,(a) How large is the desired fiscal stimulus? Please enter the answer in billions, whole numbers only.Given MPC (marginal propensity to consume) = 0.75, if the government implements an expansionary fiscal policy as (1) cutting taxes by $10 billion, then by how much would total spending increase over an infinite period? (2) spending $10 billion, then by how much would total spending increase over an infinite period?Suppose that the fiscal policy multiplier is 8.6. What is MPC? Use that MPC and assume that there is no crowding out in this economy. If the federal government knows that it will take a $750 billion rightward shift in AD to end a recession, how much does government spending need to be raised to accomplish that?
- Suppose the economy begins at full employment and then consumer confidence rises. As a result, the economy is currently experiencing an AD shortfall of $120 billion (AD is 120 below fe) and the MPC=8. What is the appropriate change in Government spending if fiscal policy is used to move the economy back to full employment? a) $24 billion increase in G b) none of the other answers is the appropriate amount of change in G c) $30 billion decrease in G d) $40 billion increase in G e) $120 billion decrease in GSuppose actual real GDP is $13.19 trillion, potential real GDP is $12.96 trillion, the marginal propensity to consume is 0.75, and that the government has a balanced budget. If we ignore price effects, by how many trillions of dollars should the government change its spending to fix the gap while keeping the federal budget balanced? (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.)How much government spending needs to be increased by to maintain full employment in the economy If the economy was facing recessionary gap of $2,000 billions? Assume MPC is .75? How much tax cut should government give if they wanted to eliminate this recessionary gap through tax cut?
- Suppose that the national economy is experiencing a recession with an estimated recessionary gap of $10 billion. Congress is considering the use of fiscal policy to ease the recession, and due to current political sentiments, it has determined that the maximum spending increase the government is willing to support is $3 billion. The government wants to make up the remainder of the recessionary gap using tax cuts. If a spending increase of $3 billion is approved and the MPC is 0.6, by how much will taxes need to be reduced to close the remainder of the recessionary gap?In which situation would it make the most sense to send stimulus checks as an exapansionary fiscal policy? -The federal reserve recently raised interest rates because of increasing inflation. -Forced shut-downs of the economy due to a health pandemic lead to a reduction in aggregate demand. -A real estate boom leads to a booming economy with growing aggregate demand. -A stock market crash leads to reduction in aggregate demand.Assume MPC = 0.80. If an initial fiscal restraint of $100 billion is desired, by how much must Instructions: In part a, enter your response as a whole number. In part b, round your response to two decimal places. government spending be reduced? $ ____ billion taxes be raised? $ ____ billion
- Macroeconomic** In the Keynesian model, when government decreases its spending by $20 billion, and it decreases taxes by $30 billion, and the MPC is .75, by how much will total spending in the economy change? Reg. multiplier = 4, tax multiplier = -3 Would this be 4 * 20 = 80 billion? The actual answer is 10 billion which I don't get it at all. Thanks.Using the AE model, show the economy in equilibrium. Then, show the impact of an increase in government spending to reduce the unemployment rate.Would the above be considered expansionary or contractionary fiscal policy?Assume the change in government spending in above is $25 billion dollars and MPC = .95. What will be the change in GDP?Suppose that the economy is experiencing a recession with an estimated recessionary gap of $20 billion. Congress is considering the use of fiscal policy to ease the recession, but due to current political sentiments, it has determined that the maximum spending increase the government is willing to support is $1 billion. It wants to make up the remainder of the recessionary gap using tax cuts. If a spending increase of $1 billion is approved and the MPC is 0.9, by how much will taxes need to be reduced to close the remainder of the recessionary gap? Instructions: Round your answer to 2 decimal places. $ billion