MACROECONOMICS FOR TODAY
MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Chapter 10.A, Problem 13SQ
To determine

Implication of the GDP at the Y1 level.

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The country of Merryville has an unemployment rate that is greater than the natural rate of unemployment. Using a correctly labeled graph of aggregate demand and aggregate supply, show the current equilibrium real gross domestic product, labeled YC, and price level in Merryville, labeled PLC. The president of Merryville is receiving advice from an economic adviser who advises the president to decrease personal income taxes. How would such a decrease in taxes affect aggregate demand? Explain.  The government of Merryville increases spending on goods and services by $200 billion, which is financed by borrowing. If the marginal propensity to consume in Merryville is 0.75: Calculate the multiplier  What is the maximum possible change in real gross domestic product (GDP) that could result from the $200 billion increase in government spending?
When an economy is operating in a negative output gap (Recessionary Gap) which of the following must be true? a. Unemployment is less than full employment b. Employment is greater than full employment c. Employment is equal to Natural rate of unemployment d. Unemployment is greather than the Natural rate of Unemployment.
If the short-run IS–LM equilibrium occurs at a level of income above the natural level of output, then _______ taxes shifts the _______ curve to the right and can return output to the natural level. a. a decrease; LM b. an increase; IS c. a decrease; IS d. an increase; LM
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