Consider a macroeconomy where the current population is 800 thousand people. Gross domestic private investment is constant $2500 million while consumer expenditure is described by the equation: C = 580+ 0.8DI. The government is fairly active, with a total expenditure of $2000 million and net taxes of $2550 million. Further investigation of the macroeconomy reveals that imports are constant at $3000 million while exports are constant at $2500 million. Currently, the overall price level (GDP deflator) is 118 and the potental GDP level is $13.5 billion. (Question 7 of 7) Now, consider that the government decreases taxes by 7.5%. While the change had a direct impact on the economy, other market conditions led to an unanticipated change in the economy. Specifically, imports decrease by 7.5%. At the same time, given the birth rate, mortality rate, and net migration, the economy experienced a 0 % change in its population. As a result of these changes, what can be said about the macroeconomy? (complete the following sentence) As a result of the change in taxes and the market environment, the economy ✓as their standard of living ✓ gap. One can conclude that the economy has and the average person is ✓ Furthermore, if the current overall price level is less than 118, one can conclude that the changes resulted from a change in
Consider a macroeconomy where the current population is 800 thousand people. Gross domestic private investment is constant $2500 million while consumer expenditure is described by the equation: C = 580+ 0.8DI. The government is fairly active, with a total expenditure of $2000 million and net taxes of $2550 million. Further investigation of the macroeconomy reveals that imports are constant at $3000 million while exports are constant at $2500 million. Currently, the overall price level (GDP deflator) is 118 and the potental GDP level is $13.5 billion. (Question 7 of 7) Now, consider that the government decreases taxes by 7.5%. While the change had a direct impact on the economy, other market conditions led to an unanticipated change in the economy. Specifically, imports decrease by 7.5%. At the same time, given the birth rate, mortality rate, and net migration, the economy experienced a 0 % change in its population. As a result of these changes, what can be said about the macroeconomy? (complete the following sentence) As a result of the change in taxes and the market environment, the economy ✓as their standard of living ✓ gap. One can conclude that the economy has and the average person is ✓ Furthermore, if the current overall price level is less than 118, one can conclude that the changes resulted from a change in
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:Consider a macroeconomy where the current population is 800 thousand people. Gross domestic private investment is constant $2500 million while consumer expenditure is described by the equation: C = 580+ 0.8DI. The government is fairly active, with a total expenditure of $2000 million and
net taxes of $2550 million. Further investigation of the macroeconomy reveals that imports are constant at $3000 million while exports are constant at $2500 million. Currently, the overall price level (GDP deflator) is 118 and the potental GDP level is $13.5 billion.
(Question 7 of 7)
Now, consider that the government decreases taxes by 7.5%. While the change had a direct impact on the economy, other market conditions led to an unanticipated change in the economy. Specifically, imports decrease by 7.5%. At the same time, given the birth rate, mortality rate, and net
migration, the economy experienced a 0 % change in its population.
As a result of these changes, what can be said about the macroeconomy? (complete the following sentence)
As a result of the change in taxes and the market environment, the economy
as their standard of living
✓ gap. One can conclude that the economy has
✓and the average person is
V Furthermore, if the current overall price level is less than 118, one can conclude that the changes resulted from a change in
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