Answer the questions below for the economy of Motak using the graph below. 1000 900 800 700 600 500 400 300 200 100 Government spending / net taxes 0 The Economy of Motak 400 800 1200 1600 2000 Real GDP NTR G1 Tools G₂ a. If GDP is $1,200 and government spending is G₁, the size of Motak's budget deficit is $ b. If government spending is decreased by the size of the deficit in part (a), draw the new curve labelled G2 in the graphing area above. c. Suppose the multiplier has a value of 2, the new level of equilibrium GDP is $[ d. Motak's deficit at this new level of equilibrium GDP is $ [ billion. billion. billion.

Answer the questions below for the economy of Motak using the graph below. 1000 900 800 700 600 500 400 300 200 100 Government spending / net taxes 0 The Economy of Motak 400 800 1200 1600 2000 Real GDP NTR G1 Tools G₂ a. If GDP is $1,200 and government spending is G₁, the size of Motak's budget deficit is $ b. If government spending is decreased by the size of the deficit in part (a), draw the new curve labelled G2 in the graphing area above. c. Suppose the multiplier has a value of 2, the new level of equilibrium GDP is $[ d. Motak's deficit at this new level of equilibrium GDP is $ [ billion. billion. billion.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section11.B: Algebraic Treatment Of Taxes And Fiscal Policy

Problem 3TY

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Step 1: Define GDP

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Step 2: A) Calculate Budget deficit

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Step 3: B) Graph the new level of government spending

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Step 4: C) Compute the new level of equilibrium

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Step 5: D) Compute Motak's deficit at the new level of equilibrium

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