suppose the government wishes to eliminate a recessionary GAP of 100 billion and the  MPC is .75. How much must the government increase in spending instead of increasing government spending by the amount you calculated? What would be the effect of the government decreasing taxes by this amount explain?

Q: Consider a hypothetical closed economy in which households spend $0.60 of each additional dollar…

A: Marginal Propensity to Consume (MPC) is the proportion of an increase in income that gets spent on…

Q: Suppose the MPC is .90 and the MPI is .10. If government expenditures go up $ 100 billion while…

A: The expenditure multiplier shows the impact of change in autonomous spending on total spending and…

Q: suppose the government wishes to illuminate recessionary of a gdp of 100 billion in the MPC is .075.…

A: To calculate increase in government spending we have to first calculate the spending multiplier.

Q: Assume that equilibrium real GDP is $ 800 billion, potential real GDP is $ 950 billion, the MPC is…

A: “Hey, since there are multiple subpart questions posted, we will answer first three subpart. If you…

Q: If the MPC in an economy is .8, government could close a recessionary expenditure gap of $200…

A: Answer: Given, MPC (Marginal Propensity to consume) = 0.8 Recessionary Expenditure Gap= $200 To find…

Q: If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of $80…

A: A negative output gap also known as recessionary output gap is when the long run output exceeds the…

Q: Suppose the MPC = 0.6? What will be the government spending multiplier? If, in this economy,…

A: An increase in the government expenditure means increase in the national income of the country. The…

Q: Assume the MPC is 0.8. If government were to impose $20 billion of new taxes on household income,…

A: Given MPC = 0.8 New taxes imposed = $20 billion

Q: Which of the following statements is true?

A: Government spending refers to the amount of expenditure carried out by the government on the…

Q: Suppose that consumption is 70 million and disposable income is 350 and that the economy is…

A: A recessionary GDP gap refers to when natural GDP is higher than actual GDP. This implies actual GDP…

Q: If the MPC In an economy Is 0.80, government could close a recessionary expenditure gap of $100…

A: Meaning of Money Multiplier: As from the word, the money multiplier refers to the situation under…

Q: Suppose the government seeks to achieve a balanced budget by levying taxes of $50 billion and making…

A: If MPC=0.8 then  MPS=1-MPC MPS=1-0.8 MPS=0.2

Q: A recessionary gap is how much GDP needs to increase from the current GDP to achieve full…

A: Recessionary gap: In general, a recessionary deficit is a disparity between real and future demand…

Q: If there is a recessionary gap of $200 Billion and the MPC is .9, how much would government spending…

A: Hi. Since there are two questions, we will solve only the first one. 9. Recessionary gap is given by…

Q: Suppose a government increases its purchases by $5 billion, and the marginal propensity to consume…

A: In an economy, the consumption and investment decisions of the people depends upon various factors…

Q: Given the following consumption fiction, C= 100 + 0.6YD calculate by how much induced consumption…

A: We are going to find the change in consumption spending to answer this question.

Q: If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of S80…

A: The marginal propensity to consumer (MPC) refers to the change in the change in the consumption…

Q: In a private closed economy where MPC= 0.8, if consumers reduce their spending by $20 billion and…

A: The macroeconomic equilibrium in an economy is determined by the aggregate demand and aggregate…

Q: How much government spending needs to be increased by to maintain full employment in the economy If…

A: *Answer:

Q: Calculate the net cumulative change in the aggregate expenditure if taxes were cut by $200 billion…

A: Marginal propensity to consume measures the proportion of extra income that is spent on consumption.…

Q: Given a MPC of 0.75, if consumer spending decreases by $300 billion, we would expect RGDP to…

A: MPC=0.75 Decrease in consumer spending=$300

Q: If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of $100…

A: ANSWER     The marginal propensity to consumer (MPC) refers to the change in the change in the…

Q: If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of $160…

A: Here, it is given that MPC is 0.8, which implies that an increase in income by 1 percent will lead…

Q: If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of S80…

A: Given data: MPC is 0.80 Expenditure gap is $80 billion

Q: Suppose the MPC in an economy is 0.95. What should the government do with taxes if they want to…

A: The magnitude of change in income due to change in autonomous spending is known as multiplier. The…

Q: For this question, assume AE = 900 + 0.75Y and the full-emloyment level of income is 4000. What is…

A: Recessionary gap is the gap between the level of real GDP and potential output, when the real GDP is…

Q: An Economy has no imports or taxes, the MPC is 0.90 and real GDP is $12 trillion. If businesses…

A: Answer: Given values: MPC(marginal propensity to consume)=0.90GDP=$12 trillionIncrease in business…

Q: The total expenditure schedule in Macroland begins with these initial levels (in billions of…

A:

Q: The country is experiencing a serious rise in inflation which the government wants to control…

A: Gross domestic product is the market value of all goods and services produced in the economy in a…

Q: What is the effect on savings of a tax cut of $15 billion? Is this inflationary or deflationary?…

A: The marginal propensity to consume (MPC) measures the change in the consumption spending of…

Q: The equilibrium level of real GDP is Rs 1,000 billion, the full employment level of real GDP is Rs…

A: Marginal propensity to consume (MPC) : it can be defined as change in consumption level due to…

Q: Assume the current equilibrium level of income is $200 billion as compared to the full-employment…

A: MPC is the marginal propensity to consume which is the proportion of change in income spent on…

Q: The country is experiencing a serious rise in inflation which the government wants to control…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Suppose that autonomous consumption is 1,500, government purchases are 500, planned investment…

A: We can find the equilibrium GDP by the following formula: Y = C + I + G + NX where,  Y is…

Q: Explain the effects of the following actions on equilibrium income, assuming that the marginal…

A: The multiplier effect states that a change in income is a multiple of a change in expenditure.…

Q: Suppose that a certain country has an MPC of .9 and a real GDP of $400 billion. If its investment…

A: The total production of good and services across the sectors of economy in a particular period of…

Q: What will an increase in the tax rate cause? A decrease in the spending A multipliers An increase in…

A: Multiplier effect is shows the multiplication of one varible due to change in another varible

Q: The country is experiencing a serious rise in inflation which the government wants to control…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Government expenditures represents one of the injections of expenditure. Explain how an increase in…

A: In the circular flow of economy, leakages reduce the flow of income in the economy and injections…

Q: if the MPC in an economy is .80 government could shift the aggregate demand curve leftward by $48…

A: Answer: Correct option: (A) increasing taxes by $12 billion Explanation: If the government increases…

Q: Suppose the president is successful in passing a $10 billion tax increase. Assume that taxes are…

A: Tax multiplier is a fiscal multiplier which measures the multiples of change in gross domestic…

Q: The following table shows consumption (C), investment spending (I), and government purchases (G), in…

A: If the income tax rate is 25%, the disposable income (after tax) is equal to 75% of the real GDP.…