The reason for decrease in tax rate increases AS as well as AD, whereas an increase in government purchase will increase AD but not AS.

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Answer 1

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Chapter 24, Problem 12P

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To explain:

The reason for decrease in tax rate increases AS as well as AD, whereas an increase in government purchase will increase AD but not AS.

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Autonomous Spending: $1,000 Invest2, 000 Government Spending: $3, 000 Exports: $500 C1: .55 Tax Rate: .22Marginal Propensity to Import: .09 If Investment drops by 20%, and if the government decides not to spend, whatwould the new tax rate have to change to in order to offset the drop in Y?

Use the information in the following table to answer the questions below. Assume you are dealing with short-run aspects of the economy, so the marginal propensity to consume is constant. Also, for simplicity, assume this economy has no taxes. In your answers, expain brifly how did you get the numerical result. Real GDP Consumption PlannedInvestment GovernmentPurchases Net Exports $9,000 $7,800 $1,500 $1,000 -$700 $10,000 $8,600 $1,500 $1,000 -$700 $11,000 $9,400 $1,500 $1,000 -$700 $12,000 $10,200 $1,500 $1,000 -$700 $13,000 $11,000 $1,500 $1,000 -$700 $14,000 $11,800 $1,500 $1,000 -$700 Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). What will be the new equilibrium level of GDP? Consumption?

Use the information in the following table to answer the questions below. Assume you are dealing with short-run aspects of the economy, so the marginal propensity to consume is constant. Also, for simplicity, assume this economy has no taxes. In your answers, expain brifly how did you get the numerical result. Real GDP Consumption PlannedInvestment GovernmentPurchases Net Exports $9,000 $7,800 $1,500 $1,000 -$700 $10,000 $8,600 $1,500 $1,000 -$700 $11,000 $9,400 $1,500 $1,000 -$700 $12,000 $10,200 $1,500 $1,000 -$700 $13,000 $11,000 $1,500 $1,000 -$700 $14,000 $11,800 $1,500 $1,000 -$700 (a) What is the equilibrium level of real GDP in this economy? (b) Compute the marginal propensity to consume. (c) Compute the government expenditures multipler. (d) Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). What will be the new equilibrium level of GDP? Consumption?

Answer 2

Question

Chapter 24, Problem 12P

To determine

To explain:

The reason for decrease in tax rate increases AS as well as AD, whereas an increase in government purchase will increase AD but not AS.

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Answer 3

Question

Chapter 24, Problem 12P

To determine

To explain:

The reason for decrease in tax rate increases AS as well as AD, whereas an increase in government purchase will increase AD but not AS.

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Answer 4

Question

Chapter 24, Problem 12P

To determine

To explain:

The reason for decrease in tax rate increases AS as well as AD, whereas an increase in government purchase will increase AD but not AS.

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Answer 5

Chapter 24, Problem 12P

To determine

To explain:

The reason for decrease in tax rate increases AS as well as AD, whereas an increase in government purchase will increase AD but not AS.

Answer 6

Chapter 24, Problem 12P

To determine

To explain:

The reason for decrease in tax rate increases AS as well as AD, whereas an increase in government purchase will increase AD but not AS.

Answer 7

Chapter 24, Problem 12P

To determine

To explain:

The reason for decrease in tax rate increases AS as well as AD, whereas an increase in government purchase will increase AD but not AS.

Answer 8

Expert Solution & Answer

Answer 9

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Answer 10

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Answer 11

Ch. 24 - Prob. 1P Ch. 24 - Prob. 2P Ch. 24 - Prob. 3P Ch. 24 - Prob. 4P Ch. 24 - Prob. 5P Ch. 24 - Prob. 6P Ch. 24 - Prob. 7P Ch. 24 - Prob. 8P Ch. 24 - Prob. 9P Ch. 24 - Prob. 10P

The reason for decrease in tax rate increases AS as well as AD, whereas an increase in government purchase will increase AD but not AS.

Solution Summary: The author explains that a decrease in tax rate increases AS as well as AD, whereas an increase in government purchase increases AD but not AS.

To explain:

The reason for decrease in tax rate increases AS as well as AD, whereas an increase in government purchase will increase AD but not AS.

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Chapter 24 Solutions

The reason for decrease in tax rate increases AS as well as AD, whereas an increase in government purchase will increase AD but not AS.

Solution Summary: The author explains that a decrease in tax rate increases AS as well as AD, whereas an increase in government purchase increases AD but not AS.

To explain: The reason for decrease in tax rate increases AS as well as AD, whereas an increase in government purchase will increase AD but not AS.

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Chapter 24 Solutions

To explain:

The reason for decrease in tax rate increases AS as well as AD, whereas an increase in government purchase will increase AD but not AS.