Government Purchases (G) and Tax Revenues (T) 0 HJ KL GDP Refer to the diagram. The degree of built-in stability in the economy could be increased by altering the government expenditures line so that it has a positive slope. O reducing government purchases so that the purchases line shifts downward but parallel to its present position. O changing the tax system so that the tax line has a greater slope. O changing the tax system so that the tax line is shifted downward but parallel to its present position.

Government Purchases (G) and Tax Revenues (T) 0 HJ KL GDP Refer to the diagram. The degree of built-in stability in the economy could be increased by altering the government expenditures line so that it has a positive slope. O reducing government purchases so that the purchases line shifts downward but parallel to its present position. O changing the tax system so that the tax line has a greater slope. O changing the tax system so that the tax line is shifted downward but parallel to its present position.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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QUESTION 10 The multiplier effect demonstrates that: O equal increases in government spending and taxes do not change the equilibrium GDP equal increases in government spending and taxes reduce the equilibrium GDP equal increases in government spending and taxes increase the equilibrium GDP. taxes have a stronger effect upon equilibrium GDP than do government purchases. government purchases have a stronger effect upon equilibrium GDP than do taxes. Click Save and Submit to save and submit. Click Save All Answers to save all answers. SA
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2. Consumption function: C=500+0.8Yd, net tax: T=500, governmentspending: G=500, investment: I=1200, export: X=500 and imprt: M=700. According to this; a) Calculate the equilibrium level of output(Ye). b) Calculate the consumption and saving at Ye. c) Find the change in equilibrium level of output(Ye) if government spending increase 200. Use governmentspending multiplier.