Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Question
Chapter 11, Problem 12E
To determine
Assume that the equilibrium real
Calculate the increase in government spending to eliminate the GDP gap.
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Potential GDP is at 500 trillion, actual GDP is at 375 Trillion. What is the gdp gap?
When a business buys a new computer to design its product, this spending is called?
A. Goverment expenditure
B. Investment
C. Consumption
D. Export
if the economys real gdp is 400 billion less than full empyment. how much is needed to close the gap if the spending mumtiplyer is 3.33 ?
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Similar questions
- Exercise D24 Compare two policies: a tax cut on income or an increase in government spending on roads and bridges. What are both the short-term and long—term impacts of such policies on the economy?arrow_forwardExplain how to derive a total expenditures (TE) curve.arrow_forwardIf the MPC is 0.9 what will happen to GDP if the government cut spending bt $2.arrow_forward
- What is the relative importance of government spending (G) in aggreagte demand and some factors that affect it?arrow_forwardDuring a recession, does G or I fall more? Why? G = goverment spending I = investment spendingarrow_forwardHow to calculate the level of GDP base on the MPC & MPS? Historical durations of recessions? The effect of foreign trade on the U.S. economy? Importance of who holds the public debt?arrow_forward
- What is the GDP gaparrow_forwardWhat would happen to the level output income if the government increase tax collections on personal income by 100 billion and spent the entire mouth. Assume MPS equals .20.arrow_forwardIf the government wants to increase real GDP levels, it could A) decrease government expenditures and increase taxes. B) increase government expenditures. C) decrease government expenditures. D) increase taxes.arrow_forward
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