Calculate what the new equilibrium income should be if the government of this country decides to cancel all taxes, implying the tax rate would now be 0%
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The following information is provided about an open economy with a government. Use the information to answer the questions that follow:
C = 450 + 0.4Y I = 350
G = 150
X = 70
Z = 35 + 0.1Y
T = 0.15Y
Yf = 1550
Calculate what the new equilibrium income should be if the government of this country decides to cancel all taxes, implying the tax rate would now be 0%
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- What effect will each of the changes listed in Study Question 3 of Chapter 27 have on the equilibrium level of GDP in the private closed economy? Explain your answers.Consider a closed economy without a government. If the GDP of the economy is $63,000 and the consumption in the economy is $45,000, the saving rate in the economy is ________. 86 percent 24 percent 57 percent 75 percentThe following information is provided about an open economy with a government. Use the information to answer the questions that follow:C = 450 + 0.4YI = 350G = 150X = 70Z = 35 + 0.1YT = 0.15YYf = 1550 Q1. Calculate what the new equilibrium income should be if the government of this country decides to cancel all taxes, implying the tax rate would now be 0% Q2. Before the government decreased the tax rate, how much of government spending was required to bring the economy to full employment?
- For the goods market of an open economy to be in equilibrium, the interest rate must be at 2% when GDP equals 120. We also know the following about consumption (C), investment (1), fiscal policy (taxes T and government expenditures G), imports (M) and exports (X) of the country: C = 20 + b*Y_{D} I = 44 T = 60 G = 22 M = 16 X = 32 where b is the marginal propensity to consume and Yo is net disposable income. What is the value of total consumption? Select one: a. 18 b. 20 C. 38 d. 120If the government runs a trade surplus, a fiscal deficit, and savings remain unchanged, what will happen to the investment component of GDP? Group of answer choices - ONE OPTION ONLY Investment will increase. Investment will remain unchanged. Investment will decrease. Not enough information is given, assuming our simple basic model as the measure of investment.Which of the following best describes the catch-up effect? Question 14 options: It is easier for a country to grow fast and "catch up" with richer countries if it starts out relatively poor. Saving will always "catch up" with investment spending. If investment spending is low, increased saving will help investment to "catch up." Rich countries aid relatively poor countries so as to help them "catch up."
- Which of the following equations is correct for an economy that does not have a government or a foreign sector? Multiple Choice MPC × MPS = 1 MPC/MPS = 1 MPC - MPS = 1 MPC + MPS = 1Suppose the following information is about a hypothetical open economy. C= 500+0.8Y , lg = 300 , G= 300 , Xn = 100.calculate equlibrium income, equlibrium consumption, find the new equlibrium income if gross domestic investment decreases to 200 and calculate the multiplier for this macroeconomic model.The data in columns 1 and 2 in the accompanying table are for a private closed economy:a. Use columns 1 and 2 to determine the equilibrium GDP for this hypothetical economy. b. Now open up this economy to international trade by including the export and import figures of columns 3 and 4. Fill in columns 5 and 6 and determine the equilibrium GDP for the open economy. Explain why this equilibrium GDP differs from that of the closed economy.c. Given the original $20 billion level of exports, what would be net exports and the equilibrium GDP if imports were $10 billion greater at each level of GDP?d. What is the multiplier in this example?
- The following question relates only to the equilibrium in the goods market IN A CLOSED ECONOMY and asks you to carry out a graphical analysis using both the Keynesian cross diagram together with the IS-MP diagram. >>) Suppose after the government has implemented the reduction in taxation that the central bank wants to keep the level of investment at the same level as before the tax reduction. How can the central bank intervene in the market to achieve this goal? Explain and illustrate graphically how the central bank can keep investment at the same level as before. Is there any additional impact of the central bank intervention on output, consumption and interest rates? If so what is the impact?In a closed economy, subsistence consumption is 10 billions, households spend 60% of their net disposable income on leisure consumption, investment is constant at 40 billions, taxes are 20 billions, government spending is 20 billions and the gross domestic product is 145 billions. Assume that suppliers always respond to variations in demand, that it takes them 1 month to adjust to new demand levels and that they make adjustments once per month (if any). One day, the government increases its spending to 30 billions. After 2 months (at the end of the 2nd month), by how much has the gross domestic product increased? Select one: a. 16 b. 25. c. 32 d. 50Consider the following equations for a small open economy C = 2500 + 0.85Yd; T = 700 + 0.25Y; G = 8000; TR = 800; I = 4000 + 0.2Y; M = 3000 + 0.25Y; X = 2000 Use the reduced form equation to compute equilibrium national income. Compute the values of disposable income, consumption expenditure, tax revenue, and net exports. Using a measure, you are familiar with, demonstrate if the economy is operating a balanced budget.