Planned expenditure function question with lump-sum tax Do all parts to the question (show your work) Assume in Fantasticland, MPC = 0.75, and autonomous consumption = $6000. Planned investment = $2000, and planned government purchases = $5000. All Planned I and G are autonomous expenditures. Taxes (T) is $1000, and net exports zero. %3D %3D a. Write out the consumption function b. What is induced consumption in this model С. Write out the planned expenditure function (show your work) d. Calculate current equilibrium real current GDP (income) (show your work) е. How much is the expenditure multiplier? f. How much is the net tax multiplier At the current level of equilibrium, the economy is experiencing a recessionary gap $4000. How much is the full employment GDP? h. How much will fantasticland change lump sum tax to close the recessionary gap? Write out the new planned expenditure function to reflect the change in lump sum taxes to close the recessionary gap of $4000. j. Graph the planned expenditure function. Show current equilibrium point, full employment Y, shift in planned expenditure for a change in lump-sum taxes. Label the autonomous points.

Planned expenditure function question with lump-sum tax Do all parts to the question (show your work) Assume in Fantasticland, MPC = 0.75, and autonomous consumption = $6000. Planned investment = $2000, and planned government purchases = $5000. All Planned I and G are autonomous expenditures. Taxes (T) is $1000, and net exports zero. %3D %3D a. Write out the consumption function b. What is induced consumption in this model С. Write out the planned expenditure function (show your work) d. Calculate current equilibrium real current GDP (income) (show your work) е. How much is the expenditure multiplier? f. How much is the net tax multiplier At the current level of equilibrium, the economy is experiencing a recessionary gap $4000. How much is the full employment GDP? h. How much will fantasticland change lump sum tax to close the recessionary gap? Write out the new planned expenditure function to reflect the change in lump sum taxes to close the recessionary gap of $4000. j. Graph the planned expenditure function. Show current equilibrium point, full employment Y, shift in planned expenditure for a change in lump-sum taxes. Label the autonomous points.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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