EBK ECONOMICS
13th Edition
ISBN: 8220106799642
Author: PARKIN
Publisher: PEARSON
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Chapter 28, Problem 23APA
To determine
Identify the immediate change in aggregate planned expenditure and change in real GDP in the short run.
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South Korea Plans $10 Billion Stimulus Package to Boost JobsThe government of South Korea announced a $10 billion (11.2 trillion won) fiscal stimuluspackage, which will increase social welfare subsidies for maternity leave and for the healthcareneeds of older people and will also create new public sector jobs.Source: CNBC, June 4, 2017If the slope of the AE curve is 0.7, calculate the immediate change in aggregate planned expenditure andthe change in real GDP in the short run if the price level remains unchanged.
a) About Country A, what is your estimate of the country's marginal propensity to consume
(MPC) based on the following information on its GDP (Y) and the components thereof
(in billion dollars) for two past years? Show calculation.
Year 1
Year 2
c)
GDP
C
I
11200
8000
2200
12000 8500 2400
G
800
880
The next few parts are about Country B, whose government plans to cut taxes by $24 billion
as a measure to fight the current recession. The marginal propensity to consume (MPC) in
Country B is known to be 34. There will be no crowding-out effect.
e)
NX
200
220
b) What is the initial effect (in billion dollars) of the tax cut on Country B's aggregate
demand? (The "initial effect" here refers to the effect on AD after only the first round of
increased spending.)
What is the total effect of the tax cut on aggregate demand? Explain why it is different
from the initial effect.
d) How does the total effect of this $24 billion tax cut compare to the total effect of a $24
billion increase in…
CS 24
Economics
Chapter 28 Solutions
EBK ECONOMICS
Ch. 28.1 - Prob. 1RQCh. 28.1 - Prob. 2RQCh. 28.1 - Prob. 3RQCh. 28.2 - Prob. 1RQCh. 28.2 - Prob. 2RQCh. 28.2 - Prob. 3RQCh. 28.2 - Prob. 4RQCh. 28.3 - Prob. 1RQCh. 28.3 - Prob. 2RQCh. 28.3 - Prob. 3RQ
Ch. 28.4 - Prob. 1RQCh. 28.4 - Prob. 2RQCh. 28.4 - Prob. 3RQCh. 28.4 - Prob. 4RQCh. 28 - Prob. 1SPACh. 28 - Prob. 2SPACh. 28 - Prob. 3SPACh. 28 - Prob. 4SPACh. 28 - Prob. 5SPACh. 28 - Prob. 6SPACh. 28 - Prob. 7SPACh. 28 - Prob. 8SPACh. 28 - Prob. 9SPACh. 28 - Prob. 10SPACh. 28 - Prob. 11SPACh. 28 - Prob. 12SPACh. 28 - Prob. 13SPACh. 28 - Prob. 14SPACh. 28 - Prob. 15APACh. 28 - Prob. 16APACh. 28 - Prob. 17APACh. 28 - Prob. 18APACh. 28 - Prob. 19APACh. 28 - Prob. 20APACh. 28 - Prob. 21APACh. 28 - Prob. 22APACh. 28 - Prob. 23APACh. 28 - Prob. 24APACh. 28 - Prob. 25APACh. 28 - Prob. 26APACh. 28 - Prob. 27APACh. 28 - Prob. 28APACh. 28 - Prob. 29APACh. 28 - Prob. 30APACh. 28 - Prob. 31APACh. 28 - Prob. 32APACh. 28 - Prob. 33APACh. 28 - Prob. 34APA
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