K Suppose that real GDP is currently $1.18 trillion, potential GDP is $1.24 trillion, the government purchases multiplier is 2, and the tax multiplier is -1.2. a. Holding other factors constant, government purchases will need to be increased by $ trillion to bring the economy to equilibrium at potential GDP. (Round to four decimal places as needed.) b. Holding other factors constant, taxes have to be cut by $ trillion to bring the economy to equilibrium at potential GDP. (Round to four decimal places as needed.) c. Construct an example of a combination of increased government spending and tax cuts that will bring the economy to equilibrium at potential GDP. The combination of increasing government spending by economy to equilibrium at potential GDP. (Round to four decimal places as needed.) and cutting taxes by trillion will bring the

K Suppose that real GDP is currently $1.18 trillion, potential GDP is $1.24 trillion, the government purchases multiplier is 2, and the tax multiplier is -1.2. a. Holding other factors constant, government purchases will need to be increased by $ trillion to bring the economy to equilibrium at potential GDP. (Round to four decimal places as needed.) b. Holding other factors constant, taxes have to be cut by $ trillion to bring the economy to equilibrium at potential GDP. (Round to four decimal places as needed.) c. Construct an example of a combination of increased government spending and tax cuts that will bring the economy to equilibrium at potential GDP. The combination of increasing government spending by economy to equilibrium at potential GDP. (Round to four decimal places as needed.) and cutting taxes by trillion will bring the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Discuss the current Fiscal Policy with the impact of the coronavirus on macroeconomics in place to support the US economy. Also, explain how the Fiscal Policy is expected to impact GDP, Inflation and unemployment Please do fast .. ASAP .. fast
A Moving to another question will save this response. Question 23 Fiscal policy can move us to equilibrium at Full Employment by O a. these are all possible fiscal policies to bring us to full employment. O b. bailing out troubled industries with special subsidies like the "paycheck protection" during the pandemic. O c. making changes in G, net government spending. O d. changing tax rates people have to pay. A Moving to another question will save this response. tab 1 Q ABA 2 W E R T
1. Indicate whether each of the following government actions are Expansionary or Contractionary. Determine if the situation describes to changes in leakages or injections and whether it increases or decreases. Then indicate whether it is an automatic or discretionary stabilizer. /18 a) In middle of a recession, government provides subsidies to support exports of Canadian products. b) As the recession deepens, government expenditures on employment insurance increase ($ paid to unemployed people by the government)... c) The Government passes a new law to impose a new carbon tax d) As the economy slows, Government spends 100's of millions on roads and bridges. e) As the economy strengthens in a strong recovery, the amount of tax money from sales tax increases f) In the midst of a recession, the federal government decides to reduce income tax rates. Put a check mark in the proper boxes You will complete 3 columns for each prompt – a prompt will either effect leakages or injections. (not…
3. Focusing on the tax cut of 1964, the personal current tax receipts for 1965, the year after the tax cut is $ _______ billion. 4. Focusing on the tax cut of 1964, the personal current tax receipts for 1966, two years after the tax cut is $ _______ billion. 5. Focusing on the tax cut of 1964, the personal current tax receipts for 1967, three years after the tax cut is $ _______ billion.
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2. Assume a given economy has an equilibrium GDP of $360 billion. A. If government spending and taxes both increase by $40 billion, determine the new equilibrium GDP. B. If both G and taxes increase by $40 billion, what impact will these two changes happening at the same time have on the budget? In other words, will these two changes cause a surplus, a deficit, or a balanced budget? C. Solve for the numerical value of the balanced budget multiplier.
FISCAL POLICY, DEF spending has shifted AD left and now we are at AD • Assume that the economy's full-employment is Q- and we want the government to restore full-employment with stable Py using fiscal tools. It has 3 main options: 1. Increase government spending 2. Reduce taxes 3. Use a combination of the twe Assume that a hypothetical economy with an MPC of 0.8 is experiencing severe recession. 1) By how much would government spending have to increase to shift the aggregate demand curve rightward by $25 billion? How large a tax cut would be needed to achieve this same increase in aggregate demand? Why the difference? 1 Money Multiplier (K) = 1-MPC Total Change in Spending = multiplier × new spending injection
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The Canadian federal budget moved from a surplus of 9.6billioninthe2007-2008 fiscalyeartoade ficitof5.8 billion the next year, and a large deficit of S55.6 billion in 2009-2010. a. Suppose real GDP was at potential in each of the first two years. What can you conclude about the cause of the change in the budget deficit? Show this change in a diagram of the budget deficit function. b. Suppose from 2008-2009 to 2009-2010, two things happened: real GDP fell and the government implemented an expansionary fiscal policy (both of which were true). Show these two separate events in a diagram of the budget deficit function.
100 T. 80 G 60 40 O $ 100 200 300 400 500 600 700 800 900 GDP Refer to the diagram, in which Tis tax revenues and Gis government expenditures Al figures are in billons of doltars if the ful-employment ODP400 billion while the actual GDP is $200 billion: (Show your calcutations) a. What is the actual budget deficit? b. What is the cyclically adjusted budget deficit? c. The value of cyclically adjusted deficit identifies which type of discretionary fiscal policy? 20 G T.G ($)