A decrease in government purchases of $2 billion leads to an initial $1.1 billion decrease in withdrawals. a. In this case MPW is MPC is , and the spending multiplier in this economy is . Enter your responses for marginal propensities and multiplier values rounded to 2 decimal places. b. With this change in government purchases the AD curve shifts to the (Click to select) v by $ of the curve shift rounded to 1 decimal place. Do not put a minus sign in your answer. billion. Enter your response for the size C. As a result of this shift the equilibrium price level will (Click to select) v and equilibrium real output will (Click to select) v

A decrease in government purchases of $2 billion leads to an initial $1.1 billion decrease in withdrawals. a. In this case MPW is MPC is , and the spending multiplier in this economy is . Enter your responses for marginal propensities and multiplier values rounded to 2 decimal places. b. With this change in government purchases the AD curve shifts to the (Click to select) v by $ of the curve shift rounded to 1 decimal place. Do not put a minus sign in your answer. billion. Enter your response for the size C. As a result of this shift the equilibrium price level will (Click to select) v and equilibrium real output will (Click to select) v

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose that real GDP is currently $19.3 trillion, potential GDP is $23.0 trillion, the government purchases multiplier is 1.6, and the tax multiplier is -1.6. Holding other factors (such as prices and interest rates) constant, how will taxes (T) need to change to bring the economy to equilibrium at potential GDP? Provide your answer in dollars measured in trillions rounded to two decimal places. Use a negative sign for negative changes. Do not include any symbols, such as "S," "," "%," or "," in your answer. Your Answer: Answer
If the spending multiplier is 2.5 and the economy is in a $600 billion contractionary gap, how much should I increase government purchases to eliminate the gap?
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Assume an economy in which:(i) there are no exports and no imports,(ii) investors always want to spend $200 billion, or I = 200,(iii) government spends $500 billion and tax revenue is $200 billion,(iv) consumption is a linear function of disposable income, C=100+0.8Yd Assume instead that the government wishes to maintain taxes at $200 billion(T=200), but wants to achieve an equilibrium level of national income of $4200 billion(Y=4200) by increasing government spending. To achieve this result, by how much mustgovernment spending increase?
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The simple economy of Altria shown in the table below has no government or taxes and no international trade. Its investment is autonomous and its MPC is constant. a. Complete the table below. Remember to use a minus (-) sign to indicate negative values. Y S I AE 500 0 750 1,500 2,250 3,000 3,750 с 500 1,000 0 750 b. The value of expenditures equilibrium is $ c. The value of the multiplier is
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Assume that the Marginal Propensity to Consume (MPC) is 0.8. If the multiplier effect is taken into account, the reduction in government expenditure by $ 200 million will shift the overall demand process to the correct order below. A) right, $1,000 million B) left, $ 200 million C) left, $160 million D) left, $1,000 million E) right, $ 160 million
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If the marginal propensity to consume is then the government spending multiplier is 3. True O False
A decrease in government purchases of $6 billion leads to an initial $4.5 billion decrease in withdrawals. a. In this case MPW is, MPC is, and the spending multiplier in this economy is Enter your responses for marginal propensities and multiplier values rounded to 2 decimal places. b. With this change in government purchases the AD curve shifts to the by $billion. Enter your response for the size of the curve shift rounded to 1 decimal place. Do not put a minus sign in your answer. c. As a result of this shift the equilibrium price level will (Click to select) vv and equilibrium real output will C A decrease in government purchases of $6 billion leads to an initial $4.5 billion decrease in withdrawals. MPC is a. In this case MPW is , and the spending multiplier in this economy is propensities and multiplier values rounded to 2 decimal places. Enter your responses for marginal b. With this change in government purchases the AD curve shifts to the (Click to select) by $ of the curve…