6. Given the following hypothetical example, complete the computations. Given: MPC=0.8, required reserve ratio is 10%, How large would each policy have to be to achieve the following: A. A spending decrease of $100b - how large would the change in government spending need to be? work below) - and would it be expansionary or contractionary fiscal policy? B. A spending decrease of $100b- how large would the change in taxes need to be (show your work below). and would it be a tax increase or a tax decrease?. C. A decrease in the money supply of $100b- how much would the Fed have to inject into banks? work) à (show your (show your
6. Given the following hypothetical example, complete the computations. Given: MPC=0.8, required reserve ratio is 10%, How large would each policy have to be to achieve the following: A. A spending decrease of $100b - how large would the change in government spending need to be? work below) - and would it be expansionary or contractionary fiscal policy? B. A spending decrease of $100b- how large would the change in taxes need to be (show your work below). and would it be a tax increase or a tax decrease?. C. A decrease in the money supply of $100b- how much would the Fed have to inject into banks? work) à (show your (show your
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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H10.
![6. Given the following hypothetical example, complete the computations. Given: MPC=0.8, required reserve ratio is 10%, How large
would each policy have to be to achieve the following:
A. A spending decrease of $100b - how large would the change in government spending need to be?
work below) - and would it be expansionary or contractionary fiscal policy?
B.
A spending decrease of $100b- how large would the change in taxes need to be (show your work below).
and would it be a tax increase or a tax decrease?.
C. A decrease in the money supply of $100b- how much would the Fed have to inject into banks?
work)
(show your
(show your](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1f66b072-56d3-4d1d-be03-6dbb7c90ba7d%2Ffbe4b11e-b44a-4c5a-a7b6-b75ff00bf5c9%2F7sjfsta_processed.jpeg&w=3840&q=75)
Transcribed Image Text:6. Given the following hypothetical example, complete the computations. Given: MPC=0.8, required reserve ratio is 10%, How large
would each policy have to be to achieve the following:
A. A spending decrease of $100b - how large would the change in government spending need to be?
work below) - and would it be expansionary or contractionary fiscal policy?
B.
A spending decrease of $100b- how large would the change in taxes need to be (show your work below).
and would it be a tax increase or a tax decrease?.
C. A decrease in the money supply of $100b- how much would the Fed have to inject into banks?
work)
(show your
(show your
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