3. If C = 1,500+ 0.60Y and T = 50, what is the after-tax consumption function?a.C= 1470+ 0.4Ywwwb.C 1470 +0.6Ywww=C.C 1500+ 0.6Ywww.=d.C 1530 +0.6Ywww=

3. If C = 1,500+ 0.60Y , what is the after-tax consumption function?a.C 1470+ 0.4Yb.C 1470+ 0.6YC.C…

Answered: 3. If C= 1,500+ 0.60Y and T = 50, what…

3. If C= 1,500+ 0.60Y and T = 50, what is the after-tax consumption function? a.C wwwwwww 1470+ 0.4Y b.C 1470+ 0.6Y = C.C 1500+ 0.6Y d.C 1530 +0.6Y H

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 10E

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Question

3. If C = 1,500+ 0.60Y and T = 50, what is the after-tax consumption function?
a.C= 1470+ 0.4Y
www
b.C 1470 +0.6Y
www
=
C.C 1500+ 0.6Y
www.
=
d.C 1530 +0.6Y
www
=

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a tax decrease will decrease consumption a tax increase will increase consumption consumption and after-tax income are unrelated consumption varies inversely with after-tax incomes consumption varies directly with after-tax incomes
Consideraneconomycharacterisedby: C=500+0.8(Y−T) I=400−120r+0.1Y G=300 T=0.25Y L(r,Y)=Y−300r M/P=600 whereC,Y,I,G,T,r,LandM/P,denoteconsumption,output,investment, governmentspending,taxes,theinterestrate,liquiditypreferencesandthereal moneysupply,respectively. •DeriveexpressionsfortheISandtheLMschedulesandplotthetwocurves. •Findtheequilibriuminterestrateandtheequilibriumlevelofincome. •DerivetheKeynesianmultiplierandcommentitspropertiescomparedtothe standardcase. •CalculateandinterprettheeffectsonYandrofanincreaseofmoneysupply thatbringM/Pto1200
Refer to the following graph to answer the next three questions. Interest rate $50 billion S 5% 4% D2 D₁ $125 $150 government borrowing (billions of dollars) Savings, investment, According to the graph, private investment of crowding-out. decreased by $50 billion O remained unchanged increased by only $25 billion decreased by $25 billion increased by $50 billion as a result
Refer to the information provided in Table below to answer the question that follow. All Figures in Billions of Dollars Consumption Spending Output (Income) Net Taxes (C 100+ 0.9Yd) Savings 2,600 2,800 3,000 3,200 3,400 3,600 3,800 100 100 100 100 100 100 100 2,350 2,530 2,710 2,890 3,070 3,250 3,430 150 170 190 210 230 250 270 Planned Investment Purchases 150 150 150 150 150 150 150 Government Spending 200 200 200 200 200 200 200 Refer to Table The economy is at the equilibrium level of output. If government spending increases by $200 billion, the new equilibrium level of output is Select one: a. $4,400 billion. b. $5,600 billion. C. $4,000 billion. loo Ed. $4,600 billion.
C = 450 + 0.4YI = 350G = 150X = 70Z = 35 + 0.1YT = 0.15YYf = 1550Q.2.5 Calculate what the new equilibrium income should be if the government of thiscountry decides to cancel all taxes, implying the tax rate would now be 0%.
._______ When not provided, they become dissatisfiers.
Not written by hand solution Suppose that the typical Canadian spends 70 percent of their income. There is an income tax rate is 8% per period. If the government wanted to see the effect of a tax cut of $80 billion, what would be the tax multiplier that they would have to use. **Make sure that your answer is a number that is rounded to two decimal places. For example if it is 4.3578 then make it 4.36 in your answer***
Interest Rate (%) 20 18 16 14 12 10 8 6 2 0 ID₂ ID₁ 5 10 15 20 25 30 35 40 45 50 Investment ($B) Refer to the diagram. Assume that the investment demand curve is ID₁. The crowding-out effect of a large public debt would be shown as a(n) O shift of the investment demand curve from ID₁ to ID₂. O leftward shift of the investment demand curve. O increase in the interest rate from 4 percent to 6 percent and a decline in investment spending of $5 billion. O increase in the interest rate from 6 percent to 8 percent and a decline in investment spending of $40 billion.
This question is based on the following diagram: Z 800 0 10,8 (4/5) 1 4000 YF= 6000 N Y By how much must government spending increase to reach full employment? Select one: ○ A. 400 OB. 4000 ○ C. 2500 O D. 2000
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11. If the marginal propensity to consume is 0.5, the tax multiplier is:(A) -2.5. (B) -2 (C) -1 (D) -1.666
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