EBK ECONOMICS TODAY
18th Edition
ISBN: 9780133920116
Author: Miller
Publisher: YUZU
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Question
Chapter 13, Problem 1FCT
To determine
Explanation of the difference in value of Keynesian spending multiplier as 5 and that of fiscal multiplier as 1.
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Students have asked these similar questions
According to the standard textbook Keynesian analysis, which is greater: the tax multiplier or the government spending multiplier? Explain the reasoning behind this relationship.
Consider the Keynesian Cross model. If the fiscal multiplier equals 2, and the government decides to increase government purchases by 100, by how much would equilibrium output increase?
If the Keynesian consumption function were C = 2,000 + 0.75YD , what would the value of the tax multiplier be, and how much would equilibrium $output/$income, Y, change if taxes were decreased by 200?
Group of answer choices
A) Tax multiplier = - 4 ; change in Y = + $160
B) Tax multiplier = - 5 ; change in Y = + $1,000.
C) Tax multiplier = - 4 ; change in Y = + $800.
D) Tax multiplier = - 5 ; change in Y = + $4,000.
E) Tax multiplier = - 3 ; change in Y = + $600.
Chapter 13 Solutions
EBK ECONOMICS TODAY
Ch. 13.D - Prob. 1PCh. 13.D - Prob. 2PCh. 13.D - Prob. 3PCh. 13 - Prob. 13.1LOCh. 13 - Prob. 13.2LOCh. 13 - Prob. 13.3LOCh. 13 - Prob. 13.4LOCh. 13 - Prob. aFCTCh. 13 - Prob. bFCTCh. 13 - Prob. 1CTQ
Ch. 13 - Prob. 2CTQCh. 13 - Prob. 1FCTCh. 13 - Prob. 2FCTCh. 13 - Prob. 1PCh. 13 - Prob. 2PCh. 13 - Prob. 3PCh. 13 - Prob. 4PCh. 13 - Prob. 5PCh. 13 - Prob. 6PCh. 13 - Prob. 7PCh. 13 - Prob. 8PCh. 13 - Prob. 9PCh. 13 - Prob. 10PCh. 13 - Prob. 11PCh. 13 - Prob. 12PCh. 13 - Prob. 13PCh. 13 - Prob. 14PCh. 13 - Prob. 15PCh. 13 - Prob. 16P
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- Why will a temporary tax increase be insignificant in reducing consumption expenditures by the amount expectedarrow_forward15. If the MPC is 3/4, what is the government spending multiplier in the simple Keynesian model?arrow_forwardIf the marginal propensity to consume is equal to 0.8, and the government injects $50,000,000 of spending into the economy, then the shift of the AD curve BEFORE crowding-out would be:arrow_forward
- Consider a Keynesian model but where investment (just like consumption) is increasing in aggregate income, e.g., because investment depends on business cash flow. Now that investment depends on aggregate income, a fiscal stimulus has more effect on equilibrium output.Answer true, false, or uncertain. Please briefly explain your answerarrow_forwardAccording to Keynesian economics, what impact would a balanced budget amendment to the constitution requiring the federal government to balance its budget annually have on the economy?arrow_forwardUse the Keynesian cross to predict the impact on equilibrium GDP of equal-sized increases in both goovernment purchases and taxes.arrow_forward
- Calculate the fiscal multiplier if the marginal propensity to save is 0.2.arrow_forwardContrast the effectiveness of fiscal policy in the AD-AS and IS-LM models.arrow_forwardAccording to the classical macroeconomic model, expansionary fiscal policy has an inflationary effect True or falsearrow_forward
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