If the government increases the effective tax rate on capital a. the IS curve shifts to the left b. the IS curve shifts to the right c. the LM curve shifts to the left d. the LM curve shifts to the right e. the FE line shifts to the left f. the FE line shifts to the right
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- Could you do C and D A country has an initial real output of $162 Billion. What would the final output be expected to be if:a. The government spends $15 billion on infrastructure and the MPC of the country is 0.35b. The government reduces taxes by $3.5 billion and the MPW of the country is 0.75c. The government makes no changes to taxes or spending.d. The government decreases spending nationwide by $9 billion in a country where people are likely to withdraw 60 cents on every new dollar of income.A country has an initial real output of $162 Billion. What would the final output be expected to be if:a. The government spends $15 billion on infrastructure and the MPC of the country is 0.35b. The government reduces taxes by $3.5 billion and the MPW of the country is 0.75c. The government makes no changes to taxes or spending.d. The government decreases spending nationwide by $9 billion in a country where people are likely to withdraw 60 cents on every new dollar of income.Assume a hypothetical closed economy. The National income identity expression for this economy is given as follows; Y= C + I + G, where C = α + β (Y – T), I is autonomous investment spending and G represents Govt purchases. Suppose that marginal propensity to consume is 0.70 . If the Government decreases spending by kshs 300 billion, calculate the change in real income If the Government increases taxes by kshs 200 billion, calculate the change in real income If the Government decreases spending by kshs 500 billion and at the same time decreases taxes by kshs 400 billion, calculate the change in real income.
- Q50 An increase in taxation … Select one: a. increases the demand for goods and the IS curve shifts to the right. The demand for money increases and the interest rises and a movement along the LM curve takes place. b. decreases the demand for goods and the IS curve shifts to the left. As taxation increases the supply of money decreases and the LM curve shifts to the right. c. decreases the demand for goods and the IS curve shifts to the left. The demand for money decreases and the interest falls causing the LM curve to shift to the left. d. decreases the demand for goods and the IS curve shifts to the left. The demand for money decreases and the interest falls causing a movement along the LM curve.Assume taxes are zero and an economy has a consumption function of C = 0.59 (Yd) + $213.05. What is the break-even level of income for this economy? Round your answer to two digits after the decimal.Q-1 The following table shows income and consumption: Calculate: A- Saving (S), B- Marginal propensity to consume (MPC), C-Marginal propensity to save (MPS), D- Average propensity to consume (APC) E- Average propensity to save (APS). Q-2 Compute the (a) Number of unemployed, (b) Unemployment-rate, (c) Population, and (d) Labor force participation rate, using this data: Number of employed = 1800 million Not in labour force =730 million Number of Labour force =2500 million Q-3 Discuss how to control or reduce the Inflation and Unemployment.
- You are given the following information about a closed economy with no government: Consumption = 115 + 0.6Y Investment = 550 Calculate the equilibrium level of income. Is the equilibrium level of income also the full employment level of income? Explain your answer.Using the real intertemporal model with investment, predict the effects on employment and the real wage, investment and the real interest rate, consumption, and output following a temporary increase in government spending. For each variable explain why the temporary increase in government spending will have the predicted effect.During the 1930s the U.S. entered the Great Depression. During the Great depression investment fell from a yearly rate of $16.7 billion to $1.7 billion. In 1932, President Hoover increased income taxes. Assume the MPC is .92 C). If the AD shortfall in 1934 was $300 billion, what change in government expenditures on goods and services (G) would you have recommended to restore full-employment? D). If the AD shortfall in 1934 was $300 billion, what change in income/transfer payments would you have recommended ? E). If the AD shortfall in 1934 was $300 billion, what change in income taxes would you have recommended ?
- Which of the following methods would best describe a deflationary fiscal policy? Select one: a) Taxes decrease Public spending increases b) Taxes increases Public spending decreases c) Taxes decrease Public spending constant d) Taxes decrease Public sending decreases e) Taxes incraese Public spending increasesIn 2001, the Bush Administration increased spending by $100 billion and raised taxes by $70 billion at thesame time. It’s likely that:A. interest rates will most likely not increase.B. interest rates will most likely increase.C. business investment is not likely to change.D. business investment is likely to increase due to crowding outA temporary increase in government spending a. shifts LM curve to the left. b. shifts IS curve to the left. c. shifts IS curve to the right. d. shifts LM curve to the right.