In a linear aggregate demand model:A lower tax rate leads to a new equilibrium at higher output by shifting the ADcurve upwards.Oc_1(1-t) + m is the slope of the AD line in the 45-degree diagram.1/(1 - c_1(1-t) + m) is the size of the multipler.None of these are true.

Step 1: Let's evaluate each option: 1. A lower tax rate leads to a new equilibrium at higher output…

Answered: In a linear aggregate demand model: A…

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter9: Aggregate Expenditures

Section: Chapter Questions

Problem 8E

See similar textbooks

Similar questions

Given the Aggregate demand function of US AD= 5000 + 0.7Yd. Interpret this equation and diagramatically express the equilibrium output
An economy is described by the following: C=20+0.9Y I=120-200r. Md=250+0.2Y-400r. Ms/P=1250 Y=70 W=17.5 Lf=144 a) Find AS and AD. b) Find the equilibrium level of Y and P c) Graphically represent this economy d) Find the long-run Y of this economy. e) What is the level of government expenses G, the government needs to impose in order to lead the economy to the full employment? (Show the long-run graphically).
An Aggregate Expenditure model with AS = 2p + 20 – 2W and WO = 10, C = 26 + 0.8(Y – 20 – .25Y), | = 10, G = 10 is initially in long-run equilibrium Y* = YO. Net exports NXO = 50 – P – .1Y increase to NX1 = 70 – P - 1Y. After this shock the long run the price level will be equal to
type plz
A technological change that permanently lowered energy costs would cause the: Group of answer choices AS curve to shift to the left. AS curve to shift to the right AD curve to shift to the left. AD curve to shift to the right.
In this problem you will work with the IS-MP model to calculate a macroeconomic equilibrium using algebra. The steps are: 1) find the IS equation 2) find the MP equation 3) combine them by substituting the r value from the MP equation into the IS equation Assume C = 1 + 0.75Y - 0.5T - 25r, I = 19 - 75r, G = 12, T = 14, the average FFR = 0.05, expected inflation is 3%, the risk premium is 4%, and potential output is 80. What is the output gap in the macroeconomic equilibrium?
Refer to Table 8.9. The equilibrium level of aggregate output is Select one:
As you know, supply and demand shifts are caused by one of their determinants. Shifts in aggregate demand (AD) show the effect of events on price level and Real GDP. Any event that causes a change in consumer, business, or government spending or any change in net exports (C+l+G+Xn) will shift AD. Any event that causes a change in production costs or increases productivity will shift aggregate supply (AS). Decide if the following events are Micro, shifting supply or demand, or Macro, shifting AD or AS. Give the direction in which the graph shifts. Demand Situation Aggregate Supply Aggregate Demand Supply Sales of Atlanta Braves gear grows with the success of the team. 1. The President and Congress pass a trillion dollar stimulus bill to provide aid during recession. 2. 3. Salmonella outbreak in peanut processing plants threatens lunches for school children. 4. Pomegranates are shown to be cancer fighting superfoods. Value of U.S. dollars declines, exports increase. 5. Global oil prices…
Suppose you are given the following information about an economy: Short run Aggregate Supply: SRAS = Y = 5000r+ 14,400 Long run Aggregate Supply: Aggregate Demand: Investment Spending: Consumption Spending: Government Spending: Net Exports (eX – iM): LRAS = Y* = 25,000 AD = Y=C+I+G+NX_ I = 4000 – 250r C = 1000 +0.75(Y – T) G = 2000 NX = 500 Taxes – Transfers: T = 2400 Monetary Policy: Money Demand: Money Market equilibrium: Fisher equation: where i is the nominal interest rate (i.e. when the interest rate is 7%, it means i= 7) r = 2 n м 3 20,000- 2000i M$ = MD i = r+T e. Find the short run equilibrium level of real GDP (Y), and inflation rate (t), in the short run. What is the output gap in the economy? Is it an expansionary or recessionary gap?
An economy is described by the following: C=20+0.9Y I=120-200r Md=250+0.2Y-400r Ms/P=1250 Y=70 W=17.5 Lf=144 a) Find agregate supply and agregate demand. b) Find the equilibrium level of Y and P. c) Graphically represent this economy. d) Find the long-run Y of this economy. e) What is the level of government expenses G, the government needs to impose in order to lead the economy to the full employment? (Show the long-run graphically).
a reccessionary gap exists when aggregates demand is above the full employment level of output
An economy is in equilibrium at a real GDP of 750, but current estimates put potential output at Yp = 700. a) Answer the following fill-in the blank question. When Y = 750 and Yp = 700 there is a (Select One) gap and the size of the gap is equal to 0 (Select One) inflationary b) Answer the following fill-in the blank recessionary Note: Keep as much precision as possible design calculations. Your final answer should be accurate to at least three decimal places. Research suggests that the MPC is 0.8, the MPM is 0.15, and the net tax rate is 0.2. Therefore, the slope of AE is Oand the multiplier is 0 which means that G must be decreased by 0 to remove the gap and achieve equilibrium. c) If the government preferred to change its net tax rate to eliminate the gap, and not change government expenditure, what new tax rate would be required to eliminate the gap? Note: Keep as much precision as possible during your calculations. Your final answer should be accurate to at least three decimal…

SEE MORE QUESTIONS

Recommended textbooks for you

Economics:

Economics

ISBN:

9781285859460

Author:

BOYES, William

Publisher:

Cengage Learning

Economics:

Economics

ISBN:

9781285859460

Author:

BOYES, William

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS

In a linear aggregate demand model: A lower tax rate leads to a new equilibrium at higher output by shifting the AD curve upwards. Oc_1(1-t) + m is the slope of the AD line in the 45-degree diagram. 1/(1 - c_1(1-t) + m) is the size of the multipler. None of these are true.