How large a tax cut would be needed to achieve the same increase in aggregate demand? $ 13 bilion b. Determine one possible combination of government spending increases and tax increases that would accomplish the same goal without changing the amount of outstanding debt (e, maintaining the budget balance at its current value) Increase spending by Increase taxes by billion billion
How large a tax cut would be needed to achieve the same increase in aggregate demand? $ 13 bilion b. Determine one possible combination of government spending increases and tax increases that would accomplish the same goal without changing the amount of outstanding debt (e, maintaining the budget balance at its current value) Increase spending by Increase taxes by billion billion
Chapter11: Managing Aggregate Demand: Fiscal Policy
Section: Chapter Questions
Problem 2TY
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![Assume that a hypothetical economy with an MPC of 0.8 is experiencing severe recession
Instructions: In part around your answers to 2 decimal places. Enter your answers as positive numbers in part & enter your answers
as whole numbers.
a. By how much would government spending have to rise to shift the aggregate demand curve rightward by 50 billion?
S
10.00 bilion
How large a tax cut would be needed to achieve the same increase in aggregate demand?
$
13 billion
b. Determine one possible combination of government spending increases and tax increases that would accomplish the same goal
without changing the amount of outstanding debt e, maintaining the budget balance at its current value)
Increase spending by
Increase taxes by
billion
bilion
Save & Ext](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd5bf82c6-4fbd-4955-a00f-aafd777f0645%2Fb043624f-a42d-474d-9db1-dd2778c198ec%2F0vjt35_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Assume that a hypothetical economy with an MPC of 0.8 is experiencing severe recession
Instructions: In part around your answers to 2 decimal places. Enter your answers as positive numbers in part & enter your answers
as whole numbers.
a. By how much would government spending have to rise to shift the aggregate demand curve rightward by 50 billion?
S
10.00 bilion
How large a tax cut would be needed to achieve the same increase in aggregate demand?
$
13 billion
b. Determine one possible combination of government spending increases and tax increases that would accomplish the same goal
without changing the amount of outstanding debt e, maintaining the budget balance at its current value)
Increase spending by
Increase taxes by
billion
bilion
Save & Ext
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