Answer the questions below for the economy of Motak using the graph below.Government spending / net taxes400350300250200150100500The Economy of Motak200 400 600 800 1000 1200 1400 1600Real GDPNTRG1Tools/G₂O a. If GDP is $800 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 areaabove.c. Suppose the multiplier has a value of 2, the new level of equilibrium GDP is $billion.d. Motak's deficit at this new level of equilibrium GDP is $billion.billion.

Government spending implies money spent by the public sector on the purchase of products and…

Answer the questions below for the economy of Motak using the graph below. Government spending / net taxes 400 350 300 250 200 150 100 50 0 The Economy of Motak 200 400 600 800 1000 1200 1400 1600 Real GDP NTR G1 Tools 1 G₂ O 0

Answer the questions below for the economy of Motak using the graph below. Government spending / net taxes 400 350 300 250 200 150 100 50 0 The Economy of Motak 200 400 600 800 1000 1200 1400 1600 Real GDP NTR G1 Tools 1 G₂ O 0

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter18: Debates In Macroeconomics Over The Role And Effects Of Government

Section: Chapter Questions

Problem 3QP

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Answer the questions below for the economy of Motak using the graph below. Government spending / net taxes 400 350 300 250 200 150 100 50 0 The Economy of Motak 200 400 600 800 1000 1200 1400 Real GDP INTR G1 Tools G₂ 2
Only typed answer a. If GDP is $800 and government spending is G1, the size of Motak's budget deficit is $ billion. 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 3, the new level of equilibrium GDP is $ billion. d. Motak's deficit at this new level of equilibrium GDP is $ billion.
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C = 480 + 0.5YDI = 110T = 70G = 250 a. Calculate the private savings, public savings, and investment spending.b. Calculate the multiplier and explain how it affects equilibrium output.c. Suppose that the government decides to increase its spending from €250 billion to €300 billion. Find the equilibriumoutput, consumption, and disposable income. Why wouldthe government decide to expand fiscal spending?
G Spending and NTR Budget Deficit Budget Surplus Y1 V1 . I I Y2 V2 je I I Y3 I V3 G NTR Real GDP BL Real GDP In the following graph, NTR is net tax revenue, G is government spending on goods and services, BL is budget line. Which of the following is true? A balanced budget would occur at income level Y1 A balanced budget would occur at income level Y2 A balanced budget could occur at income levels Y1, Y2 or Y3 The existence of a balanced budget cannot be determined because no inflation on tex revenues is given
Suppose the economy reaches equilibrium GDP at $1,250,000 while potential GDP is at $1,500,000. Currently G=$180,000 while taxes are equal to 0.1Y (where Y is the same as real GDP). a. How large is the recessionary gap in this economy? b. At equilibrium GDP, is there a budget surplus or deficit? Solve for the value of this surplus or deficit. At the potential GDP, is there a surplus or deficit? Solve for the value of the full- employment surplus or deficit. d. Does there exist a cyclical surplus or deficit? Solve for its value C.
L Gve Up! Suppose the government, in an effort to avoid an increase in the deficit, votes for a budget neutral tax cut policy. Assume the marginal propensity to consume (MPC) is equal to 0.65 and taxes are cut by $9 billion. Round answers to the nearest billion, and specify decreases as a negative number. By how much will government spending change? change in government spending: $ billion What is the resulting change in the equilibrium level of real GDP? billion change in equilibrium level of real GDP: $
The Canadian federal budget moved from a surplus of 9.6billioninthe2007-2008 fiscalyeartoade ficitof5.8 billion the next year, and a large deficit of S55.6 billion in 2009-2010. a. Suppose real GDP was at potential in each of the first two years. What can you conclude about the cause of the change in the budget deficit? Show this change in a diagram of the budget deficit function. b. Suppose from 2008-2009 to 2009-2010, two things happened: real GDP fell and the government implemented an expansionary fiscal policy (both of which were true). Show these two separate events in a diagram of the budget deficit function.
2. Assume a given economy has an equilibrium GDP of $360 billion. A. If government spending and taxes both increase by $40 billion, determine the new equilibrium GDP. B. If both G and taxes increase by $40 billion, what impact will these two changes happening at the same time have on the budget? In other words, will these two changes cause a surplus, a deficit, or a balanced budget? C. Solve for the numerical value of the balanced budget multiplier.
K Suppose that real GDP is currently $1.18 trillion, potential GDP is $1.24 trillion, the government purchases multiplier is 2, and the tax multiplier is -1.2. a. Holding other factors constant, government purchases will need to be increased by $ trillion to bring the economy to equilibrium at potential GDP. (Round to four decimal places as needed.) b. Holding other factors constant, taxes have to be cut by $ trillion to bring the economy to equilibrium at potential GDP. (Round to four decimal places as needed.) c. Construct an example of a combination of increased government spending and tax cuts that will bring the economy to equilibrium at potential GDP. The combination of increasing government spending by economy to equilibrium at potential GDP. (Round to four decimal places as needed.) and cutting taxes by $ trillion will bring the
Suppose that real GDP is currently $1.45 trillion, potential GDP is $1.51 trillion, the government purchases multiplier is 2.4, and the tax multiplier is 2. a. Holding other factors constant, government purchases will need to be increased by $ 0.0250 trillion to bring the economy to equilibrium at potential GDP. (Round to four decimal places as needed.) b. Holding other factors constant, taxes have to be cut by $ 0.0300 trillion to bring the economy to equilibrium at potential GDP. (Round to four decimal places as needed.) c. Construct an example of a combination of increased government spending and tax cuts that will bring the economy to equilibrium at potential GDP. The combination of increasing government spending by $0.0600 trillion and cutting taxes by $ trillion will bring the economy to equilibrium at potential GDP (Round to four decimal places as needed.) $0.0600 trillion $0.1440 trillion $0.1200 trillion $0.0100 trillion