17. Suppose MPC = 0.6, and G increases by $350 and Tax increases by $350 simultaneously. How much would GDP change? (NOTE: Refer to your answers from #14 & #15) 18. Suppose MPC = 0.8, and the government intends to increase GDP by $300. To achieve the goal, tax must ( increase decrease )by $

17. Suppose MPC = 0.6, and G increases by $350 and Tax increases by $350 simultaneously. How much would GDP change? (NOTE: Refer to your answers from #14 & #15) 18. Suppose MPC = 0.8, and the government intends to increase GDP by $300. To achieve the goal, tax must ( increase decrease )by $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

17. Suppose MPC = 0.6, and G increases by $350 and Tax increases by $350 simultaneously. How much
would GDP change? (NOTE: Refer to your answers from #14 & #15)
18. Suppose MPC = 0.8, and the government intends to increase GDP by $300. To achieve the goal, tax
must (increase
decrease ) by $

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Question 34 T,G ($) 400 309 200 100 G 0 $100 200 300 400 500 600 700 800 GDP Refer to the above graph in which T is net tax revenues and G is government expenditures. All figures are in billions. In this economy: government expenditures are planned, budgeted and independent of GDP. government expenditures are planned and vary directly with GDP; tax revenues are independent of GDP. government expenditures are planned, budgeted and vary inversely with GDP. government expenditures are planned, budgeted and vary directly with GDP.
You have the following information. Calculate equilibrium GDP and enter your number in the box below. C = 200 + 0.75YD | = 800 G = 600 The government has a balanced budget.
The following graph shows the total expenditure line (TE) for an economy where current equilibrium output is $350 billion and potential output is $600 billion. The economy is experiencing _________ (a contractionary gap, an inflationary gap) equal to $______ billion. To close the output gap, government purchases could _______ (increase, decrease) by _____ ($50, 150, 75) billion. Thus, the value of the multiplier for this economy is ___________ (0.7143, 0.5833, 0.4167, 1.6667, 0.6).
Explain why the multiplier effect of an increase in consumption spending of $100 billion is larger or smaller than the effect of a tax decrease of $100 billion. (Do not just say the spending multiplier is larger or smaller. Explain why.)
If MPC = 0.5, a simultaneous increase in both taxes and government spending of $20 will a. decrease GDP by $20 b. increase GDP by $20 c. decrease GDP by $40 d. increase GDP by $40
Q1. Suppose MPC is 0.8. If government purchases increases by $10c and cuts taxes by $503, how much the equilibrium output is changed? a=6 and B=5
Using the table below to answer the following questions. Assume all values represent trillions of dollars. Construct a graph of the Aggregate planned expenditure What is the equilibrium expenditure? Explain what happens at a real GDP of $4 trillion dollars. (Note the aggregate expenditures and the effects on inventories) What are your total autonomous expenditures? What is the marginal propensity to consume? Ignoring imports and income taxes, what is the multiplier? If investment increases by $1.5 trillion, what is the change in real GDP?
Suppose that the MPC in North Laurasia is 0.6. a. What is the spending multiplier for the North Laurasian economy? Instructions: Round your answer to one decimal place. b. If the government spends an extra $1,000, by how much with the economy grow? Instructions: Enter your answer with a whole number.
Suppose the MPC is 34 and the government wants to increase output by $2000. 1. How much should government spending increase? 2. How much should taxes decrease? (You can leave your answer as a fraction) 3. Describe the intuition behind why these two values are different 4. Suppose instead the government wants to decrease output by $ 2000. By how much should they raise taxes?
TAXES Taxes are any governmental action that reduces the real income of wage-earners as well as non-working Americans. The action can also reduce the profit of business. Taxes act as a leakage from the GDP – Income Stream and will reduce both income and GDP over time. Think of taxes…. Did you buy gas on the way to school? Did it include a tax? When you purchase clothing at the mall, how much is the tax? Driver’s License? Fishing License? Hunting License? Tax on Concert Ticket? Tax on Airline Ticket? Are taxes withheld from your paycheck? Income, FICA and state or local taxes Paying bridge tolls? Taxes on personal or real property? Tax on new tires? Alcohol? Cigarettes? Imports with tariffs? Do all these taxes and licenses reduce our disposable income? Why do we sacrifice and pay these taxes? What are the ways that government helps us?
1.Suppose MPC = 0.75, if government increases taxes by $2,000, how much will the household consumption increase or decrease initially?
Suppose the following list of events describes all of the economic activity resulting from an increase in government spending. Suppose that at each step after the initial one, the marginal propensity to consume is 0.62 and the tax rate is 8%. Step 0. The government spends $8500 on meat to host a very large dinner for foreign diplomats. Step A. The butcher takes the income earned by selling the meat, saves some, and spends the rest on a wedding cake for his daughter. Step B. The baker who produced the wedding cake saves some of her earnings and uses the rest to purchase beautiful candlesticks as gifts for all of her friends. Step C. The local candlestick maker saves some of his revenue for retirement and spends the rest on building materials to improve his house. Instructions: Modify the settings in the interactive tool to represent this event. Then click "Spending Rounds" and use the table to answer the following questions. Round answers to the nearest cent, if necessary. How much does…