Q: 1. Which of the following is an example of govemment discretionary spending: A) Social Security…
A: Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: 3. Fiscal policy, the money market, and aggregate demand Consider a hypothetical economy in which…
A: The marginal propensity to save is the portion of each extra dollar of a household’s income that's…
Q: Use the green line (triangle symbol) on the following graph to show the aggregate demand curve (AD₂)…
A: The marginal propensity to consume (MPC) measures the proportion of an increase in income that is…
Q: Policy Options for Closing Output Gap Increase in Spending Tax Cut Spending Multiplier Tax…
A: Fiscal policy is the use of government spending and taxation to influence the economy.Fiscal policy…
Q: What is true about the balanced budget multiplier? A. The balanced budget multiplier is positive…
A: The balanced budget multiplier is the budget situation where the spending of the government and the…
Q: The following is information for the economy of Tandor, where taxes are wholly autonomous: C = 80…
A: The equilibrium level of income is the point at which a business can sell all of the products it…
Q: Show the impact of the increase in government purchases on the interest rate by shifting one or both…
A: The spending multiplier is a concept used in macroeconomics to measure the impact of changes in…
Q: If the tax multiplier is -5 and taxes are reduced by $200 billion, output falls by $1000 billion.…
A: Given Tax multiplier = -5 Reduction in Taxes = 200 Billion$ with reduction in taxes there is…
Q: 000 00-50,000 00-80.000 0.9 0.8 0.75
A: Spending multiplier = 1 / 1-MPC Tax multiplier = Spending multiplier – 1
Q: The marginal propensity to consume (MPC) for this economy is and the spending multiplier for this…
A: The household spends 0.5 of each additional dollar they earn, The MPC is 0.5 Spending Multiplier =…
Q: Suppose that the MPS = 0.2 and the government is interested in raising the level of output in the…
A: Hi, thank you for the question. As per our Honor code, we are allowed to attempt only first three…
Q: Suppose the government enacts a stimulus program composed of $400 billion of new government spending…
A: It is given that the government increases government spending by $400 billion and it is also given…
Q: What is the role of the fiscal multiplier in economic stimulus packages, and how does it contribute…
A: The fiscal multiplier is a basic concept in macroeconomics, especially pertinent while examining…
Q: K Suppose that real GDP is currently $1.18 trillion, potential GDP is $1.24 trillion, the government…
A: The real GDP is $1.18 trillion. Potential real GDP is $1.24 trillionSince real GDP is smaller than…
Q: Suppose the tax multiplier in an economy is -3. How will total spending (TS) change when taxes (T)…
A: Since tax multiplier is -3, it means that if T decreases by $1, TS increases by $3. So, When T…
Q: Refer to the information provided in Figure 9.3 below to answer the questions that follow. Refer to…
A: The tax multiplier, additionally acknowledged as the fiscal multiplier, is an financial idea that…
Q: ing the graph, shit the aggregate demand curve to depict the impact that a tax hike has on the…
A: Real Gross Domestic Product (GDP) rises when aggregate demand curve shifts to the right. On the…
Q: In which case will the government collect more tax revenue if tax revenue is tax rate multiplies…
A: Tax revenue refers to the income collected by the government from various forms of taxes. This…
Q: Use the graph and the inverse demand equation (P=50 - .5Q), inverse supply equation (P=0.333Q) and…
A: here in this question we find that the inverse demand function=P=50 - .5Q where the slope of the…
Q: 16. Suppose that planned investment and planned government purchases do not depend on income: I = 15…
A: Equilibrium refers to a point of balanced situation in the economy. At the equilibrium, aggregate…
Q: Refer to Figure 8-24. For an economy that is currently at point D on the curve, a decrease in the…
A: It can be defined as the concept that shows the amount of tax an individual, business, or any other…
Q: TRUE/FALSE When talking about tax multipliers using tax rates instead of the more simple lump sum…
A: Tax multiplier refers to the economic methods to compute the change in the aggregate demand by the…
Q: 8. Given each of the following values for both the spending multiplier and the tax multiplier,…
A: We're given different values for both the spending multiplier (SM) and the tax multiplier (TM), and…
Q: Suppose that real GDP is currently $17.1 trillion, potential GDP is $17.4 trillion, and the tax…
A: Real GDP refers to the total value of goods and services produced by a country's economy during a…
Q: 10. Crowding out effect Suppose economists observe that an increase in government spending of $9…
A: Marginal propensity to consume refers to change in consumption divided by change in income.
Q: Given the following model for an economy C = 100 + 0.8Yd G = 800 T = 500 I = 200 d) Find…
A: d. The Tax multiplier can be calculated with the help of the MPC and the MPS in the economy. The MPC…
Q: Suppose some imaginary economy is currently experiencing deficient aggregate demand of $64 billion.…
A: A fiscal policy is one in which the government uses taxation, government spending, and government…
Q: suppose the government wishes to illuminate recess or a gap of 100 billion in the MPC is .075 how…
A: Given, Gap = 100 billion MPC = .075
Q: 5. Suppose Bard is its own marginal propensity to consume at Bard is 0.5. Autonomous consumption at…
A: Answer to the question is as follows:
Q: Assuming T = 0, for the following three consumption functions, i) identify the mpc and mps, iii) tax…
A: Marginal propensity to consume (MPC): - it is a fraction of the change in disposable income that is…
Q: Suppose the tax multiplier in an economy is -8. If the government wants to lower total spending (TS)…
A: The tax multiplier shows the effect of any change in taxes on the aggregate demand of the economy.…
Q: Question: Given the following model for an economy C= 100 + 0.8Yd G= 800 T= 500 T= 200 d) Find Tax…
A: Given, C = 100 + 0.8Yd G = 800 T = 500 I = 200
Q: Suppose the government enacts a stimulus program composed of $500 billion of new government…
A: Increase in GDP (IGDP) can be calculated as follows. Increasing GDP is 800 billion.
Q: 10. Crowding out effect Suppose economists observe that an increase in government spending of $13…
A: given: Increase in government spending: 13 billionincrease in total demand for goods and services:…
Q: Suppose that real GDP is currently $1.45 trillion, potential GDP is $1.51 trillion, the government…
A: Real Gross Domestic Product (Real GDP) reflects the value of all goods and services produced by an…
Q: Suppose the government enacts a stimulus program composed of $500 billion of new government spending…
A: Increases in government expenditure = ΔG= $500 billion Decrease in Tax = ΔT= $200 billion Current…
Q: 2. The multiplier effect of a change in government purchases Consider a hypothetical closed economy…
A: The hypothetical economy is a closed economy.Household spending Household saving Government…
Q: Hint: Be sure that the new aggregate demand curve (AD,) is parallel to the initial aggregate demand…
A: The marginal propensity to consume is the proportion of disposable income that a person chooses to…
Q: 1. If an economy has an MPC of 0.9 what is the multiplier? 2. If an economy has an MPS of 0.2 what…
A: Multiplier Amount of new income that is generated from an addition of extra income. Marginal…
Q: Which of the following is true? a. All economists agree that the tax multiplier is smaller than…
A: Government spending multiplier = ratio of change in income/ratio of change in government spending.
Q: Given C=500 + 0.80Y, I = 100, G=100, and the government decides to finance G by also increasing…
A: C=500 + 0.80Y I=100 G=100 T=100 tY=0.25Y
Q: The government lowers $0.9 trillion in taxes, restoring GDP from $10 trillion to its potential level…
A: Tax multiplier calculates the ratio of change in GDP(gross domestic product) and T(tax).
Q: In the 2009 stimulus package, Congress included tax cuts as well as changes in government spending.…
A: Several tax increases were debated as part of the debate about economic stimulus in the aftermath of…
7) Define the tax multiplier and give the algebraic expression.
8) Assume that the government spending multiplier is equal to 4. Calculate the tax multiplier from this
information.
9) Calculate how much output would expand by if the government increased spending by $500 billion and financed
this spending by increasing lump-sum taxes by the same amount.
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- The following is information for the economy of Tandor, where taxes are wholly autonomous: C = 50+ 0.8YD where YD = (Y-T) G = T = 300 XN 104 -0.15Y I = 150 a. The value of equilibrium income is $ b. At equilibrium, the amount of the budget c. If government increased both its spending and taxes by $70, the new equilibrium income would be $ A) $940, budget Balance is 0 and $1130 B) $1040, budget Balance is 0 and $1080 C) $1140, budget Balance is 0 and $1060 D) $1240, budget Balance is 0 and $13801. Why is a $100 billion increase in government spending on goods and services more expansionary than a $100 billion decrease in taxes?The following graph shows the aggregate demand curve ( AD1) for this economy before the change in government spending. Use the green line (triangle symbol) to plot the new aggregate demand curve ( AD2) after the multiplier effect takes place. For simplicity, assume that there is no "crowding out." Hint: Be sure that the new aggregate demand curve (AD2) is parallel to the initial aggregate demand curve ( AD1 ). You can see the slope of AD1 by selecting it on the graph. 140 AD, 135 AD, 130 125 120 115 110 105 100 3 4 OUTPUT (Trillions of dollars) PRICE LEVEL
- 1. The following is information for the economy of Texas, where taxes are wholly autonomous: C = 40 + 0.8YD where YD = (Y – T) G = T = 360 I = 120 XN = 107 – 0.1Y a. What is the value of equilibrium income? b. At equilibrium, what is the amount of budget deficit or budget surplus? c. If government increased both its spending and taxes by $60, what would be the new equilibrium income?Question 1 There is a recession gap of $150 billion in the economy. The MPS is 20%. What is the MPC [Select] and the Government Spending Multiplier [Select] Government need to [Select] much [Select] change taxes, would they [Select] the Tax multiplier [Select] [Select] ? Would the spending? By how ? If the Government decided to taxes? What is and by how muchcan you explain this a little more for me? its a practice quiz. i provided the prof's answer and mild explanation of the correct answer, but I still dont understand it. 13. If government spending is increased by $5, and this increase in spending is financed by a tax increase in the same amount, the effect on equilibrium would be: A). zero – the balance each other out. B) an increase in equilibrium of $10. C) a decrease in equilibrium of $5. D) an increase in equilibrium of $5. This is his answer: 13. d (compare fiscal policy options #1 and #2 shown above and use $5 for both ∆G and ∆Tx;use any MPC, for example .90) i dont understand how to math it. Can you show me how?
- There is a tax-cut that increases your Disposable Income by $3,400, which you intend to save $510. a. Calculate the MPC. b. Interpret this MPC. (What does it mean? Define MPC and describe in this context.)c. What is the resulting fiscal multiplier? d. Interpret the multiplier and describe the multiplier effect. e. Find the total change to the economy from this tax change.Use the table below to calculate the MPC, MPS, government spending multiplier, and tax multiplier. Planned Aggregate Expenditures 2,700 3,000 3,300 3,600 3,900 4,200 4,500 MPC = (Round your response to one decimal place.) Consumption Output Spending 2,100 2,000 2,600 2,300 3,100 2,600 3,600 2,900 4,100 3,200 4,600 3,500 5,100 3,800 Planned aggregate expenditure, AE 4,000 3,500 3,000- 2,500 2,000 1,500 1,000 500+ 0+ 0 45 line 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Aggregate output, YWhat is the effect of an increase in taxes when the economy is above full employment? What is the magnitude of the tax multiplier? An increase in taxes when the economy is above full employment _______ aggregate demand and real GDP, and the price level _______. A. increases; falls B. increases; rises C. does not change; does not change D. decreases; falls The magnitude of the tax multiplier is equal to _______. A. MPC times the government expenditure multiplier B. the government expenditure multiplier divided by MPC C. MPC D. the government expenditure multiplier
- 4. The multiplier effect of a change in government purchases Suppose there is some hypothetical closed economy in which households spend $0.80 of each additional dollar they earn and save the remaining $0.20. The marginal propensity to consume (MPC) for this economy is 0.8, and the spending multiplier for this economy is 5. Suppose the government in this economy decides to decrease government purchases by $400 billion. The decrease in government spending will lead to a decrease in income, creating an initial change in consumption equal to -$2,000 billion. This decreases income yet again, leading to a second change in consumption equal to The total change in demand resulting from the initial change in government spending is The following graph shows the aggregate demand curve (AD) for this economy before the change in government spending. Use the green line (triangle symbol) to plot the new aggregate demand curve (AD₂) after the multiplier effect takes place. For simplicity, assume that…2. Fiscal policy Suppose a hypothetical economy is currently in a situation of deficient aggregate demand of $64 billion. Four economists agree that expansionary fiscal policy can increase total spending and move the economy out of recession, but they are debating which type of expansionary policy should be used. Economist A believes that the government spending multiplier is 8 and the tax multiplier is 4. Economist B believes that the government spending multiplier is 4 and the tax multiplier is 2. Compute the amount the government would have to increase spending to close the output gap according to each economist's belief. Then, for each scenario, compute the size of the tax cut that would achieve this same effect. Policy Options for Closing Output Gap Increase in Spending Tax Cut (Billions of dollars) Spending Multiplier (Billions of dollars) Tax Multiplier 4 Economist A 8 Economist B 4 2 Economist C favors increases in government spending over tax cuts. This means that Economist C…1 et Question 3 There is an inflationary gap of $40 billion in the economy. The MPC is 75%. What is the MPS [Select] and the Government Spending Multiplier [Select] Government need to [Select] much [Select] change taxes, would they [Select] the Tax multiplier [Select] [Select] ? Would the spending? By how ? If the Government decided to taxes? What is and by how much
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