16. Given the following Consumption Function as C = 350 + 0.75 (Y) ; and actual equilibrium real GDP as $700 ; and full-employment real GDP as $800. The amount of taxes that need to be cut to close up such GDP gap is: -$30.33 cannot be computed based on information provided -$35.33 -$33.33 O -$37.33

16. Given the following Consumption Function as C = 350 + 0.75 (Y) ; and actual equilibrium real GDP as $700 ; and full-employment real GDP as $800. The amount of taxes that need to be cut to close up such GDP gap is: -$30.33 cannot be computed based on information provided -$35.33 -$33.33 O -$37.33

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

The table below provides income and consumption data in billions of dollars: Disposable Income Consumption Savings 100 80 --- 200 150 --- What is the multiplier for the economy represented? A) 3.33 B) 1.42 C) 0.5 D) 4
If, in an economy, a $200 billion increase in consumption spending creates $200 billion of new income in the first round of the multiplier process and $160 billion in the second round, the marginal propensity to consume and the multiplier are, respectively, 08 and 5.0. O 0.4 and 2.5. O 0.4 and 1.67. O 0.2 and 1.25.
7. Problems and Applications Q7 Suppose economists observe that an increase in government spending of $14 billion raises the total demand for goods and services by $42 billion. If these economists ignore the possibility of crowding out, they would estimate the marginal propensity to consume (MPC) to be Now suppose the economists allow for crowding out. Their new estimate of the MPC would be than their initial one.
selecting it on the graph. PRICE LEVEL 140 135 130 6 120 115 110 106 100 AD₁ 1 5 OUTPUT (Trillions of dollars) 7 AD₂ @
2. The multiplier effect of a change in government purchases Consider a hypothetical closed economy in which households spend $0.80 of each additional dollar they earn and save the remaining $0.20. The marginal propensity to consume (MPC) for this economy is, and the spending multiplier for this economy is ▼. Suppose the government in this economy decides to decrease government purchases by $300 billion. The decrease in government purchases will lead to a decrease in income, generating an initial change in consumption equal to . This decreases income yet again, causing a second change in consumption equal to .The total change in demand resulting from the initial change in government spending is The following graph shows the aggregate demand curve (AD1) for this economy before the change in government spending. Use the green line (triangle symbol) to plot the new aggregate demand curve (AD₂) after the spending multiplier effect takes place. Hint: Be sure that the new aggregate demand…
Suppose the consumption function is C=$800 billion + 0.8 Y and the government wants to stimulate the economy. By how much will aggregate demand at current prices shift initially (before multiplier effects) with Instructions: Enter your responses as a whole number. a. a $100 billion increase in government purchases? $ billion b. a $100 billion tax cut? billion c. a $100 billion increase in income transfers? billion What will the cumulative AD shift (after multiplier effects) be for d. the increased government spending? billion e. the tax cut? billion f. the increased transfers? billion
7. Study Questions and Problems #7 Suppose autonomous government spending increases by $100 billion and the value of the MPC is 0.9. Use the following table to compute four rounds of the spending multiplier effect. Round Components of Total Spending 1 Investment Consumption Consumption Consumption 2 3 4 New Consumption Spending (Billions of dollars) After an infinite number of spending-output-spending rounds, the total change in real GDP resulting from the $100 billion increase in government spending is $ billion.
Refer to Table 1. At an output level of $1,200 billion, there is a tendency for output Group of answer choices to either increase or decrease. to remain constant. to increase. to fall.
Please do not give solution in image format thanku
N3
Suppose an economy has no imports (MPI, m = 0). The MPC (c) is 0.75 and real GDP is $120 billion. Businesses increase investment by $4 billion. The multiplier is in real GDP from the increase in investment is and the change billion. O a. 5; $16 O b. 4; $25 O C. 5; $25 O d. 4; $16 e. 0.75; $3
?