In February 2021, retail sales fell by 3.3% compared to January. What does the drop in retail sales indicate about how consumption has changed? Investment spending fell by 2.2% in February. How will these changes affect aggregate expenditures? How will equilibrium GDP be affected?

Q: The following table shows consumption (C), investment spending (I), and government purchases (G),…

A: Assume that, the income tax rate is 25%.  Base consumption is $100 (i.e., the consumption at zero…

Q: Your Facebook feed shows a news article which says the Consumer Confidence Index has decreased.…

A: My Facebook feed shows a news article which says the Consumer Confidence Index has decreased. It's…

Q: What policy might the federal government implement with regard to taxes and spending to help stop…

A: Fiscal policy refers to the changes in the federal government purchases and taxes, which are…

Q: Explain how the conduct of fiscal policy affects consumption and investment in equilibrium.

A: Fiscal policy is a macroeconomic policy that is implemented by the government for monitoring and…

Q: How can a tax cut increase investment, and what is the impact on the economy?

A: A tax is a compulsory financial charge or levy imposed by a government on individuals, businesses,…

Q: 5. Macroeconomic equilibrium and the multiplier effect The following graph shows a hypothetical…

A: AS-AD model: In this model we are given the aggregate demand curve which exhibits negative…

Q: Suppose the interest on the debt was $700 billion. If interest is paid domestically, 90% will be…

A: Given: The total debt of the country is given as $700 billion  100% interest is paid domestically…

Q: What would happen to real GDP and the price level if the government decides to boost expenditure…

A: GDP calculates the monetary value of the final goods and services—those purchased by the…

Q: Use the Aggregate Demand – Aggregate Supply Model to demonstrate the effects of expansionary fiscal…

A: The curve that depicts various quantities of goods and services being demanded by individuals at…

Q: You are given the following information about aggregate demand at the existing price level for an…

A: A GDP gap refers to the difference between a country's current GDP and its potential GDP, as shown…

Q: Using an aggregate supply and demand graph, show what happens when expansionary fiscal policies are…

A: Expansionary fiscal policy refers to the government policy that increases in government expenditure…

Q: Consider an economy that is operating below the full-employment level of real GDP. What would be the…

A: Meaning of Gross Domestic Product (GDP): The term gross domestic product refers to the situation…

Q: An economy is operating with output $50,000,000 below the natural rate of output. Fiscal policy…

A: here we calculate the how much government spending affect economy and need of tax by using the…

Q: DEFINE FISCAL POLICY. WOULD THE INCREASE OF $100 IN GOVERNMENT SPENDING HAVE THE SAME EFFECT ON GDP…

A: Fiscal policy is known as stabilizing policy in which government changes government spending or…

Q: What is the primary component(s) of GDP that Fiscal Policy is trying to effect?

A: Fiscal Policy refers to the change in government spending or taxes in order to promote economic…

Q: Assume that initial GDP is $1,000 and we want to expand it to $1,600. Average MPC for the country is…

A: Economists use the marginal propensity to save (MPS) to measure the link between income and savings.…

Q: During the recent recession sparked by financial crisis, the U.S. economy suffered tremendously.…

A: A recession is a significant decline in economic activity across the economy, lasting for an…

Q: Suppose the US Federal Government decides to increase its spending without issuing debt by raising…

A: Economy is at the natural level if the GDP is at the potential level, inflation is at the expected…

Q: The use of government purchases (G) as a fiscal policy tool can have an effect on long-run growth in…

A: Government purchase is also known as the government spending on goods and services. The federal’s,…

Q: Which of the following is not an example of government spending hike that will increase aggregate…

A: The government expenditure would result in the expenditure of the government in infrastructure and…

Q: Which of the following statements best describes the aggregate supply curve? :   The aggregate…

A: Supply refers to the quantity of the good being produced and offered for sale by the producers at…

Q: You are the Secretary of the Treasury, working with the president to implement appropriate policies.…

A: Fiscal policy is set by the government to influence economic growth. It  is a change in government…

Q: Consider the economy of Canada. Its households spend 55% of increases in their income and saves 45…

A: The problem is to estimate the size of a tax cut necessary in the Canadian economy for the actual…

Q: The graph below depicts an economy where a decline in aggregate demand has caused a recession.…

A: The objective of the question is to determine how much the aggregate demand needs to increase to…

Q: Suppose you are an economic adviser to the president, and the economy needs a real GDP increase of…

A: $280 billion.Explanation:To calculate the amount Congress must increase government spending by to…

Q: If taxes increases from $100 billion to $139 billion, and the MPC is 0.8, how much is the change in…

A: Aggregate demand is classified as the combination or merging of the demand of the services and the…