Suppose we have the following information for the simple (fixed r, fixed P, fixed W) Keynesian model. C = 400 + 0.8 I = 310 G = 140 = 400 + 0.8 (Y - T) T = 200, where C is the consumption function, (Y - T) is disposable income, I is investment, G is government spending, and T is taxes. What can you say about the government's budget situation? (Hint: Think about what “G” and “T” stand for.) Group of answer choices A) There is a budget surplus. B) There is a budget deficit. C) None of the other options. D) We cannot say anything about the government budget. E) The budget is balanced.
Suppose we have the following information for the simple (fixed r, fixed P, fixed W) Keynesian model. C = 400 + 0.8 I = 310 G = 140 = 400 + 0.8 (Y - T) T = 200, where C is the consumption function, (Y - T) is disposable income, I is investment, G is government spending, and T is taxes. What can you say about the government's budget situation? (Hint: Think about what “G” and “T” stand for.) Group of answer choices A) There is a budget surplus. B) There is a budget deficit. C) None of the other options. D) We cannot say anything about the government budget. E) The budget is balanced.
Chapter15: Fiscal Policy
Section: Chapter Questions
Problem 6SQ
Related questions
Question
Suppose we have the following information for the simple (fixed r, fixed P, fixed W) Keynesian model.
C = 400 + 0.8 I = 310
G = 140
= 400 + 0.8 (Y - T) T = 200,
where C is the consumption function, (Y - T) is disposable income, I is investment, G is government spending, and T is taxes.
What can you say about the government's budget situation? (Hint: Think about what “G” and “T” stand for.)
Group of answer choices
A) There is a budget surplus.
B) There is a budget deficit.
C) None of the other options.
D) We cannot say anything about the government budget.
E) The budget is balanced.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning