If the MPS in an economy is 0.25, government could shift the aggregate demand curve leftward by $60 billion by Multiple Choice reducing government expenditures by $15 billion. reducing government expenditures by $240 billion. increasing taxes by $60 billion.
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If the MPS in an economy is 0.25, government could shift the aggregate demand curve leftward by $60 billion by
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reducing government expenditures by $15 billion.
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reducing government expenditures by $240 billion.
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increasing taxes by $60 billion.
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- If the MPS in an economy is .2 government could shift the aggregate demand curve leftward by $20 billion by A. reducing government expenditures by $4 billion B. reducing government expenditures by $100 billion C increasing taxes by $20 billion D. increasing taxes by $200 billionIf the MPS in an economy is .4, government could shift the aggregate demand curve leftward by $50 billion by: reducing government expenditures by $125 billion. reducing government expenditures by $20 billion. increasing taxes by $50 billion. increasing taxes by $250 billion.If the MPS in an economy is 0.43, government could shift the aggregate demand curve rightward by $40 billion by increasing government spending by _____ billion dollars.
- If the MPS in an economy is 0.1, government could shift the aggregate demand curve rightward by $40 billion by( please explain as well ) A) increasing government spending by $4 billion. B) increasing government spending by $40 billion. C) decreasing taxes by $4 billion. D) increasing taxes by $4 billion.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 billionIf the MPC in an economy is 0.75, government could shift the aggregate demand curve leftward by $60 billion by:( please explain as well ) A) reducing government expenditures by $12 billion. B) reducing government expenditures by $60 billion. C) increasing taxes by $15 billion. D) increasing taxes by $20 billion.
- If the MPC in an economy is 0.6, government could shift the aggregate demand curve rightward by $30 billion by Multiple Choice decreasing taxes by $20 billion. increasing government spending by $20 billion. increasing government spending by $18 billion. decreasing taxes by $30 billion.Suppose some imaginary economy is currently experiencing deficient aggregate demand of $64 billion. Four economists agree that expansionary fiscal policy can increase total spending and move the economy out of recession, but they are unable to decide which method of expansionary policy will resolve the situation. Economist One believes that the government spending multiplier is 8 and the tax multiplier is 4. Economist Two believes that the government spending multiplier is 4 and the tax multiplier is 2. Compute the amount the government would have to increase spending to close the output gap according to each economist's belief. Then, for each scenario, compute the size of the tax cut that would achieve this same effect. Economist Three favors increases in government spending over tax cuts. This means that Economist Three likely believes that: - Government purchases increase aggregate demand by stimulating investment -Part of a dollar in tax cuts may be saved rather than…If the MPC in an economy is 0.80, government could shift the aggregate demand curve leftward by $48 billion by Multiple Choice *increasing taxes by $12 billion *Reducing government expenditures by $4 billion *Increasing taxes by $9.6 billion *reducing government expenditures by $48 billion.
- The economy is in a recession. The government enacts a policy to increase spending by $2 billion. The MPS is 0.25. What would be the full increase in real GDP from the change in government spending, assuming that the aggregate supply curve is horizontal across the range of GDP being considered? Multiple Choice $8 billion $2 billion $16 billion $4 billionThe federal government implements an expansionary fiscal policy of increased spending and decreased taxes. Policy advisors predict output will increase 4% but are surprised when only 3% growth occurs. What might account for the fact that GDP increased by less than the multiplier predicted? a. Policy advisors' calculation of MPS was too high b. The aggregate supply curve was perfectly elastic c. Foreign purchases of domestic goods was greater than expected due to a devalued currency d. Consumption increases more than expected because of the decrease in taxes e. Investment decreased due to rising interest ratesAssume that an economy with an MPC of 0.8 is experiencing a recessionary gap of $25 billion. The government has decided to intervene in the economy by using fiscal policy to fight the recession. By how much would government spending have to change to bring about a total change in aggregate demand of $25 billion? Show your work.
