The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the governmentdecides to conduct fiscal policy by changing toxes to reduce the burden of this recession.Fiscal Policy140LRASAS130120110100908070AD6050AD,4080 160 240 320 400 480 560 640 720 800Real GDP (billions of dollars)Instructions: Enter your answer as a whole number. If you are entering a negative number include a minus sign.a. How much does oggregate demanci need to change to restore the economy to its long-run equilbrilum?billionb. If the MPC is 0.667, how much do taxes need to change to shift aggregate demand by the amount you found in part a?billionSuppose instead that the MPC is 0.5.C. How much does aggregate demand and taxes need to change to restore the economy to its long-run equilibrium?Aggregate demand needs to change by $ [billion and taxes need to change by $billion.Price Level

The recession means that the economy would result in the output which is less than the long run…

Instructions: Enter your answer as a whole number. If you are entering a negative number include a minus sign. 0. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? billion b. If the MPC is 0.667, how much do taxes need to change to shift aggregate demand by the amount you found in part a? billion Suppose insteed that the MPC is 0.5. C. How much does aggregate demand and taxes need to change to restore the economy to its long-run equilibrium? Aggregate demand needs to chenge by $ ] billion and taxes need to change by $[ billion.

Instructions: Enter your answer as a whole number. If you are entering a negative number include a minus sign. 0. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? billion b. If the MPC is 0.667, how much do taxes need to change to shift aggregate demand by the amount you found in part a? billion Suppose insteed that the MPC is 0.5. C. How much does aggregate demand and taxes need to change to restore the economy to its long-run equilibrium? Aggregate demand needs to chenge by $ ] billion and taxes need to change by $[ billion.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Exhibit: The Aggregate Demand/Aggregate Supply Model 1 Which of the following statements is true?Group of answer choicesThe economy depicted in the figure experiences a recessionary gap = Yp - Y1. The economy depicted in the figure experiences a recessionary gap = YpY2. The economy depicted in the figure experiences a recessionary gap = Y2 - Y1. The economy depicted in the figure is in long-run equilibrium but not in short-run equilibrium./bar (Real GDP per year) ง Price level LRAS SRAS P3 P2 P₁ I Y₁ D Y2 Yp AD Real GDP per year
If taxes increases from $100 billion to $139 billion, and the MPC is 0.8, how much is the change in aggregate demand?
Suppose that the government engages in expansionary fiscal policy by increasing government spending. Show the initial impact by properly shifting the aggregate demand curve (AD), the short-run aggregate supply curve (SRAS), or the long-run aggregate supply curve on the graph below. Aggregate price level (P) LRAS SRAS * AD Aggregate output (Q)
Given the following model: Y = C +|+ G + X - Ż C = a + bYd Z = Zo + zYd Yd = Y - T Suppose that b = 0.8 and z = .05. Suppose there is an autonomous increase in imports (Zo) of 20 units. To counteract this contraction in domestic aggregate demand, assume the government cuts taxes by 20 units. By what amount, if any, will equilibrium income change?
Using the model of aggregate demand–aggregate supply to illustrate the traditional view,graphically compare the short-run and long-run impact of debt-financed tax cuts on:a. output.b. prices.
ANSWER it correctly please. I ll rate accordingly. Typed answer only and do fast. Don't stuck.
Price Level p* a LRAS Y* AD Real GDP AS Tools Fiscal Action 0 a. How does the short-run equilibrium compare to the initial equilibrium? The price level has (Click to select) and output has [(Click to select) b. What is the primary concern of policy makers under these conditions? high unemployment O declining value of the dollar O high Inflation V c. What policy action might the government take in order to improve economic conditions? (Click to select) fiscal policy by [(Click to select) taxes and/or (Click to select)government purchases d. Use the graph above to depict the goal of the fiscal action discussed Instructions: Use the tool provided 'Fiscal Action' to show the result of the policy action taken by the government. Plot only the endpoints of the line (2 points total). Label your line appropriately. e. What is the desired final outcome after the fiscal policy action and multiplier effect have occurred? A price level [(Click to select) P* and an output level [(Click to select) Y*…
dont use chatgpt i will5 upvote
Consider the economy represented by the aggregate demand aggregate supply (AD-AS) graph shown, where output is below full employment output (Y*) and unemployment is above the natural rate. To move out of a recession, the government should decrease taxes and increase government spending. increase taxes and decrease government spending. O decrease taxes and government spending. increase taxes and government spending. Adjust the graph to reflect the result of this policy action. Price level (P) Real GDP (Y) LRAS AD SRAS
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 rightwerd by 50 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) billion Increase spending by Increase taxes by bilion Save & Ext
A. Assume that a hypothetical economy with an MPC of .75 is experiencing severe recession. By how much would government spending have to rise to shift the aggregate demand curve rightward by $70 billion? B. How large a tax cut would be needed to achieve the same increase in aggregate demand?
Aggregate Supply and Aggregate Demand show the relationship between economic output (GDP) and price levels in the macro-economy at a given point in time. Define the terms ‘Aggregate Demand’ and ‘Aggregate Supply.’ State TWO (2) monetary and TWO (2) fiscal policies that government can adopt, to effect change in Aggregate Demand.