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 $ to equilibrium at potential GDP. (Round to four decimal places as needed.) trillion to bring the economy 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 $ to equilibrium at potential GDP. (Round to four decimal places as needed.) trillion to bring the economy 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
Chapter11: Fiscal Policy
Section: Chapter Questions
Problem 1.4P
Related questions
Question
i need a and b and c answer i will 3 upvotes.
![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 $
to equilibrium at potential GDP.
(Round to four decimal places as needed.)
trillion to bring the economy
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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F08931595-2978-476f-9b2b-e2f93ae46afc%2F93a3cd7d-2762-4efc-8b6a-8c18bed3ad3f%2Fyl93l2_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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 $
to equilibrium at potential GDP.
(Round to four decimal places as needed.)
trillion to bring the economy
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
AI-Generated Solution
Unlock instant AI solutions
Tap the button
to generate a solution
Recommended textbooks for you
![ECON MACRO](https://www.bartleby.com/isbn_cover_images/9781337000529/9781337000529_smallCoverImage.gif)
![Exploring Economics](https://www.bartleby.com/isbn_cover_images/9781544336329/9781544336329_smallCoverImage.jpg)
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
![MACROECONOMICS](https://www.bartleby.com/isbn_cover_images/9781337794985/9781337794985_smallCoverImage.gif)
![ECON MACRO](https://www.bartleby.com/isbn_cover_images/9781337000529/9781337000529_smallCoverImage.gif)
![Exploring Economics](https://www.bartleby.com/isbn_cover_images/9781544336329/9781544336329_smallCoverImage.jpg)
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
![MACROECONOMICS](https://www.bartleby.com/isbn_cover_images/9781337794985/9781337794985_smallCoverImage.gif)
![Principles of Economics 2e](https://www.bartleby.com/isbn_cover_images/9781947172364/9781947172364_smallCoverImage.jpg)
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
![Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781337617383/9781337617383_smallCoverImage.gif)
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
![Macroeconomics](https://www.bartleby.com/isbn_cover_images/9781337617390/9781337617390_smallCoverImage.gif)