If the AD excess is $300 billion and the MPC is 0.75, Instructions: Enter your responses as whole numbers. a. How much fiscal restraint is desired? |billion b. By how much do income taxes have to be increased to get that restraint? |billion c. Alternatively, how much should government reduce its spending to achieve the target? billion %24

If the AD excess is $300 billion and the MPC is 0.75, Instructions: Enter your responses as whole numbers. a. How much fiscal restraint is desired? |billion b. By how much do income taxes have to be increased to get that restraint? |billion c. Alternatively, how much should government reduce its spending to achieve the target? billion %24

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 1WNG

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If the AD excess is $300 billion and the MPC is 0.75. Instructions: Round your responses to one decimal place. a. how much fiscal restraint is desired? billion b. by how much do income taxes have to be increased to get that restraint? billion c. alternatively, how much should government reduce its spending to achieve the target? billion
If the AD excess is $100 billion and the MPC is 0.5 Instructions: Enter your responses as whole numbers. (a) How much fiscal restraint is desired? $ billion (b) By how much do income taxes have to be increased to get that restraint? $ billion
QUESTION 3 3. If the AD shortfall is $800 billion and the MPC is 0.8, a) How large is the desired fiscal stimulus? b) How large an income tax cut is needed? c) Alternatively, how much more government spending would achieve the target? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). B I U S Paragraph
Suppose the economy is operating at equilibrium, with Yo=1,000. If the government undertakes a fiscal change whereby the tax rate, t , increases by .05 and government spending increases by 50, will the budget surplus go up or down? Why?
If the AD shortfall is $800 billion and the MPC is 0.8,a) How large is the desired fiscal stimulus?b) How large an income tax cut is needed?c) Alternatively, how much more government spending would achieve the target?
explanation. Be sure to exp Assume the United States has been in another recession for the past 10 months. Unemployment is 10% and GDP has dropped $1.9 trillion from its previous peak of $ 20.8 trillion. The housing and heavy equipment industries have been hit the hardest. Inflation has been near the 2% target but has started to dip below. Also, the countries average MPC is 60. Determine the best fiscal policy/strategy to help the economy recover and explain why it is the best choice. Be sure to reference Aggregate Demand and Aggregate Supply and explain your specific tools in your answers. Calculations Explanation Graph (More space for the explanation on the back)
Suppose that real GDP is currently $17.1 trillion, potential GDP is $17.4 trillion, and the tax multiplier is -1.6. Byhow much will taxes have to change to bring the economy to equilibrium at potential GDP?
Solve all questions compulsory......
If the AD shortfall is $700 billion and the MPC is 0.95,(a) How large is the desired fiscal stimulus? Please enter the answer in billions, whole numbers only.
a) What are the three fiscal policy tools and how would each be used to counter a contractionary gap? b) True or False and explain: Fiscal Policy is effective at reducing the duration of an economic contraction. c) If the spending multiplier is 2.5 and the economy is in a $500 billion contractionary gap, how much should I increase government purchases to eliminate the gap? d) Continuing with c, if the MPC is 0.8, how much would I need to increase transfer payments to eliminate the $500 billion contractionary gap? e) True or False and explain: Households always react to tax changes in a predictable manner. Module 6: Deficits and the Debt. a) Distinguish between deficit and debt. b) Explain what crowding out is and why it reduces the impact of fiscal stimulus. c) True or false and explain: The national debt represents a threat of bankruptcy. (For d and e) Suppose the interest on the debt was $600 billion. If interest is paid domestically, 90% will be spent domestically (the remainder is…
No answer from chat gpt will dislike. Hand written solution is not allowed. Give me the answer with proper explanation.
If the MPC is 0.5, the tax multiplier is Select one: a. -1 b. -2.5 C. -1.67 d. -2