Macroeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (7th Edition)
7th Edition
ISBN: 9780134472669
Author: Blanchard
Publisher: PEARSON
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Question
Chapter 3, Problem 7QAP
a.
To determine
To graph: The impact of an increase in transfer payments (which is financed through government borrowings) on equilibrium output.
b.
To determine
To explain: The impact of an increase in transfer payments on equilibrium output if the government will pay for the increase in transfer payments.
c.
To determine
To explain: The impact of an increase in transfer payments on equilibrium output, if a transfer policy increases taxes on those with a low propensity to consume to pay for transfer to people with a high propensity to consume.
d.
To determine
To explain: Whether tax cuts will be more effective at stimulating output when they are directed towards high income or toward low-income taxpayers.
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Students have asked these similar questions
Consider an economy described by the following equations:
C = 300 + 0.90 (Y – T) (Consumption)
I = $200 (Investment)
G = $300 (Government spending)
T = $200 (Taxes)
Determine the equilibrium level of national income.
Suppose government spending increases to $400. What is the new level of income?
What is the government spending multiplier?
Suppose taxes increase to $300. What is the new level of income?
What is the government tax multiplier?
Based on your answers to (b) and (c), does the balanced budget multiplier theorem hold?
Refer to Figure 26-2. Which of the following events would shift the demand curve from D1 to D2?
a.
The government goes from running a budget deficit to running a budget surplus.
b.
Firms become optimistic about the future and, as a result, they plan to increase their purchases of new equipment and construction of new factories.
c.
A change in the tax laws encourages people to consume less and save more.
d.
A change in the tax laws encourages people to consume more and save less.
Use the following information on economy X to answer the questions below. Consumption function: C = 350 + 0.6Y Investment spending: I = 250 Government spending: G = 400 Exports of goods and services: X = 300 Imports of goods and services: Z = 150 Proportional tax rate: t =25%(Note: Show all calculations and round off to 2 decimal places).Q.4.1.1 Q.4.1.2Q.4.1.4 Q.4.1.5Calculate total autonomous spending for economy X. (3) Calculate the multiplier for economy X. (3)Calculate the budget surplus or deficit at the equilibrium level of income. (3) Calculate the change in equilibrium income if the government decides to (3) increase expenditure to R500.Q.4.1.3Calculate the equilibrium income for the economy. (Hint: Use the multiplier method).(3)
Chapter 3 Solutions
Macroeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (7th Edition)
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