Refer to the information provided in Figure 12.1 below to answer the questions that follow. AD AD AD CA) ndino aa Figure 12.1 Refer to Figure 12.1. Suppose the economy is at Point A, a decrease in taxes can cause a movement to Poil Select one: Oa. C. Ob. E. OC. B. d. D. O O
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- Suppose that a local economy has the following values for Desired C, I, G, and NX at a price levelof 100 given by: C = 6,000 + 0.9(1 − t)YI = 3,100G = 900NX = 2,000 − 0.06YThe tax rate (t) is equal to 10%. For every $1 increase in the price level, AutonomousConsumption (C) and Autonomous Investment (I) each decrease by $1.It also has an aggregate supply (AS) given by: AS = 2p10. What is the Short-Run Real GDP in this economy? Show your work. 11. Is this economy running a primary budget surplus or a primary budget deficit? How largeis it (in dollars)? Show your work. Suppose also that this government has an outstanding debt of $10,000, owed with an interestrate of 1%.12. Is this economy running a total budget surplus or a total budget deficit? How large is it(in dollars)? What is this country’s debt-to-GDP ratio? Show your work. Suppose that the above questions (Q10 – Q11) is only for the year 2010. Assume thateverything is the same (Ceteris Paribus) in 2011 and 2012 as it was in…The following set of equations describes the economy of a country A, in Africa C = 2000 + 0.75Id consumption equation I = 36000 investment G = 36000 Government Expenditure X = 2550 Exports M = 410 + 0.3Y Import equation T = 100 + 0.25Y Tax equation Compute the equilibrium National Income and imports for the country A Complete the tax multiplier and the Government spending multiplier Compute the equilibrium income and consumptionThe U.S. income tax is currently O progressive O proportional O regressive O proactive a tax.
- An economy is described by the following: C=20+0.9Y I=120-200r. Md=250+0.2Y-400r. Ms/P=1250 Y=70 W=17.5 Lf=144 a) Find AS and AD. b) Find the equilibrium level of Y and P c) Graphically represent this economy d) Find the long-run Y of this economy. e) What is the level of government expenses G, the government needs to impose in order to lead the economy to the full employment? (Show the long-run graphically).Equal increases in government spending andtaxes willa. cancel each other out so that the equilibriumlevel of real GDP remains unchanged.b. lead to an equal decrease in the equilibriumlevel of real GDP.c. lead to an equal increase in the equilibriumlevel of real GDP.d. lead to an increase in the equilibrium levelof real GDP output that is larger than theinitial change in government spendingand taxes.Consider an economy in which tax collections are always $400 and in which the four components of aggregate demand are as follows: GDP Taxes DI C I G (X - IM) $1,360 $400 $960 $720 $200 $500 $30 1,480 400 1,080 810 200 500 30 1,600 400 1,200 900 200 500 30 1,720 400 1,320 990 200 500 30 1,840 400 1,440 1,080 200 500 30 Find the equilibrium of this economy graphically. What is the marginal propensity to consume? What is the multiplier? What would happen to equilibrium GDP if government purchases were reduced by $60 and the price level remained unchanged?
- Course: Macroeconomic - IS-LM Model Prove mathematically the following: Given an increase in the proportional tax on income(t), what happens to the level of output and to the tax?" . Hint: for demostration, use the IS general function for a closed economy Y = C + I + G, where C = a + c*YD and YD = Y + TR - Y*t (where t = proportional income tax) and realize changes i.e., from "t1" to "t2"Suppose there is a bill to increase the tax on cigarettes by $1 per pack coupled with an income tax cut of $500. Suppose a person smokes an average of 500 packs of cigarettes per year—and would thus face a tax increase of about $500 per year from the cigarette tax at the person’s current level of consumption. The income tax measure would increase the person’s after-tax income by $500. Would the combined measures be likely to have any effect on the person’s consumption of cigarettes? Why or why not?The economy of Godzillaland is represented by the following:C=50+0.25Y d , T=1000, G=1000, I=100. (d) If the government increases taxes and spending by 50 what is the new equilibrium level of output? (e) Calculate the equilibrium level of output in case where taxes depend on income according to the following: T=-25+0.125Y.
- Create three diagrams for the aggregate expenditures (AE) model for a public closed economy by adding different taxes. For the Diagram #1 suppose: Autonomous Expenditures: $6000; MPC: 0.75 Taxes: $1500;Potential Output: $16500For the Diagram #2 suppose: Autonomous Expenditures: $ 6000; MPC: 0.75;Taxes: $3000;Potential Output: $16500For the Diagram #3 suppose: Autonomous Expenditures: $6000; MPC: 0.75; Taxes: $2500Potential Output: $16500Explain each diagram by determining economic gaps and/or equilibriums. How does an increase in taxes affect GDP? How does a decrease in taxes affect GDP?consumers increased consumption by a relatively small amount in 2008 and 2009 because thet believe the tax cuts temporary. true or falsePlease help me to ensuere that my answers are correct. Complete all of the blanks. What is the pre-tax equilibrium price Using the demand schedule, what is the elasticity of demand (using the traditional method) if the price had changed the equilibrium price to $60 ? Is it (elastic, inelastic, unit elastic, perfectly elastic, perfectly inelastic): Suppose a $10 tax will be imposed on the production of item A, who will carry more of the burden? (consumer, supplier, neither, equal) The consumer surplus after taxes is The total surplus after taxes is 3 : The total tax revenue is The tax has now been removed because people thought it was unfair. Will total surplus increase, decrease, or stay the same? ]By what amount if any? [ The government decides to impose a price floor at $20. After their action, what is the market price? If there is a shortage or surplus, how much is it? (0 if there isn't one) They then repeal the price floor and create a price ceiling at $40. What is the market price…
