2. Changes in taxesThe following graph shows the aggregate-demand curve.Shift the aggregate-demand curve on the graph to show the impact of a tax cut.130120Aggregate Demand11010090Aggregate Demandno70103040500OUTPUTSuppose the governments of two different economies, economy A and economy B, imp smaller MPC anent tax cut of the same size. The marginalpropensity to consume (MPC) in economy A is 0.8 and the MPC in economy Bis 0.75.are identical in all other respects.larger MPCThe tax cut will have a smaller impact on aggregate demand in the economy with the larger MPCPRICE LEVELo20

The aggregate demand curve addresses the all out amount of all labor and products requested by the…

2. Changes in taxes The following graph shows the aggregate-demand curve. Shift the aggregate-demand curve on the graph to show the impact of a tax cut. 130 120 Aggregate Demand 110 100 90 Aggregate Demand no 70 10 20 50 #0 30 OUTPUT Suppose the governments of two different economies, economy A and economy B, imp propensity to consume (MPC) in economy A is 0.8 and the MPC in economy B is 0.75. The tax cut will have a smaller impact on aggregate demand in the economy with the larger MPC PRICE LEVEL o smaller MPC anent tax cut of the same size. The marginal are identical in all other respects. larger MPC

2. Changes in taxes The following graph shows the aggregate-demand curve. Shift the aggregate-demand curve on the graph to show the impact of a tax cut. 130 120 Aggregate Demand 110 100 90 Aggregate Demand no 70 10 20 50 #0 30 OUTPUT Suppose the governments of two different economies, economy A and economy B, imp propensity to consume (MPC) in economy A is 0.8 and the MPC in economy B is 0.75. The tax cut will have a smaller impact on aggregate demand in the economy with the larger MPC PRICE LEVEL o smaller MPC anent tax cut of the same size. The marginal are identical in all other respects. larger MPC

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

1. The Multiplier and Fiscal Policy: one of the programs to combat the economic effects of the recession and pandemic was the CARES Act passed in March 2020. One of the provisions of the CARES act was a relief check of $1200 per adult and $500 per dependent child. These payments were actually advance rebates on 2020 taxes and so the payments came from the IRS. This tax cut distributed about $300 billion to most, but not all of the U.S. population. Major exceptions included families with undocumented members (which invalidated the whole family, even those who were legal residents or U.S. citizens), dependent adults (which invalidated many college students as well as seniors living with their children). The program was phased out for individuals making more than $75,000 and married couples earning more than $150,000. Which of the following statements is correct about the multiplier effect of this part of the CARES act? Group of answer choices The multiplier effect would be greater than…
7. Algebraically derive the government spending and tax multiplier for the case in which tax revenues depend on income level. Verbally explain what you do in each step of the derivation.
2
Question 6 Which of the following economic policies is more Expansionary: O An increase in both government expenditures and taxes. A decrease in both government expenditures and taxes. A decrease in government expenditures accompanied by an increase in taxes. An increase in government expenditures accompanied by a decrease in taxes.
4 Economist B believes that if tax rates are cut, tax revenue is likely to fall. This economist most likely believes that the percentage decrease in tax rates will ______________________________ percentage rise in the tax base.
Briefly explain the following concepts: a. Progressive tax structure b. Crowding-out effect
3. Suppose field workers in California, one of the largest producers of strawberries in the US, are able to organize into union and receive wage increases of 25%. How will this impact the supply of strawberries in the US market? 4. Suppose a new Congress in 2025 decides to take on the problem of the USA national debt and budget deficits by imposing a 5% tax on new farm equipment to help pay down the debt. How will this impact the supply of food in the United States? 5. Soybean, sorghum, and sunflowers can be grown through many of the states bordering Canada. After Donald Trump left office, China returned to the US market buying large amounts of soybeans to feed its pigs to satisfy Chinese consumer preferences for pork. Assume Donald Trump wins the 2024 election in China boycotts the US soybean market. How was this impact the supply of sunflower seeds in the US market? 6. Recently Vladimir Navalny, a critic of Russian leader Vladimir Putin died in prison. Suppose this results in…
Question: Solve for the equilibrium level of output in the following two scenarios: there isan income tax t=0.1, The income tax would result in the total amount of tax to be the lump sum tax and the income tax rate on income when t=0.1t=0.1 Y=−5+0.5(Y−250−0.1Y)+200+300+50' =−5+0.5(0.9Y−250)+550 =−5+0.45Y−125+550 =0.45Y−420 0.55Y=420Y=4200.55=763.636≅763.64 Please explain this solution. Where does the 0.45Y come from?
Question 1 There is a recession gap of $150 billion in the economy. The MPS is 20%. What is the MPC [Select] and the Government Spending Multiplier [Select] Government need to [Select] much [Select] change taxes, would they [Select] the Tax multiplier [Select] [Select] ? Would the spending? By how ? If the Government decided to taxes? What is and by how much
6 an increase in federal income tax rates is an example of fiscal policy that affects GDP indirectly True or False?
When a consumer withdraws cash from a drawer in his house and deposits it in a savings account, the composition of the money supply immediately changes, and the size of the money supply may eventually alter as well. Demonstrate and explain how this activity may affect the money supply in an economy.
CIENCES QUESTION 1 Study the bar chart regarding the National Budget's tax revenue and answer the questions that follow: WHERE WILL THE MONEY COME FROM IN 2021/22 AND HOW WILL IT BE SPEND GOVERNMENT SOURCES OF REVENUE 2021/22 Tax R1 365.1milj 72.6% Loans R 482.6milj 25.7% Non-tax income R 32.5milj 1.7% 1 Which revenue contributes the most to the National Budget? Give the percentage. Which revenue contributes the least to the National Budget? Give the percentage. Give ONE example of a income that is not tax. TAX REVENUE, 2 021/22 Personal inseme tax