Q.1 EXPLAIN WHY GOVERNMENT SPENDING IS REGARDED AS AUTONOMOUS IN A KEYNESIAN MODEL WITH GOVERNMENT SECTOR. WHAT DETERMINES GOVERNMENT SPENDING?
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Good day. Can you please assit on the following
Q.1 EXPLAIN WHY GOVERNMENT SPENDING IS REGARDED AS AUTONOMOUS IN A KEYNESIAN MODEL WITH GOVERNMENT SECTOR. WHAT DETERMINES GOVERNMENT SPENDING?
Q.2. HOW DOES GOVERNMENT SPENDING AFFECT THE LEVEL OF AGGREGATE AUTONOMOUS SPENDING , THE MULTIPLIER AND THE EQUILIBRIOUM INCOME IN THE ECONOMY?
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- Contrast the appropriate Keynesian response to an economy experiencing recession with the appropriate Keynesian response to an economy experiencing inflationary pressures. What are the practical problems with government being able to implement these policies?The simple aggregate expenditures model discussed in this chapter concluded The simple aggregate expenditures model discussed in this chapter concluded that one form of spending was just as good as any other; increases in all types of spending lead to equal increases in income. Is there any reason to suspect that private investment might be better for the economy than government spending? The simple aggregate expenditures model discussed in this chapter concludedKeynesian cross" exercises Let the economy in our numerical example be: C = 70 + 0.75Y I = 60 Y* = 520 Exercise 1: Add government spending G = 100, not financed by taxes by taxes Show that the new equilibrium income is: Y = 920 What is the government spending multiplier? Exercise 2 : Redo your work assuming that: 1. government spending (G: 100) is financed (in part) by a per capita tax 1. public spending (G: 100) is financed (partly) by a per capita tax (capitation) whose total amount is T=80 and, 2. the marginal propensity to consume is applied to disposable income Calculate the new equilibrium income (Y2) and the disposable income (Y ;) What is the multiplier for the government's balance? Exercise 3: If government spending is financed by a 10% income tax and the propensity to consume is applied to disposable income, calculate the equilibrium income (Y2*) (Y2*) and disposable income (Y;) In this case, what is the government's balance of payments multiplier?
- hello, so ive already asked this question but i dont understant the answer that i was given. This is what I have so far: true or false: "tax cuts directed at higher income individuals will do more to stimulate the economy than those directed to lower income individuals, in the keynesian model." my reasoning with this is that its true? can you explain this to me? wouldnt the economy be stimulated more if it was given to a lower income individual because they are most likely to spend it? ANSWER I WAS GIVEN: Step 1 According to Keynes, the economy will be an unstoppable machine operating at maximum capacity if people did not save something. To allow people to spend more, Keynesians suggested tax savings. The Keynesian model, established by British economist John Maynard Keynes portraying savings as a drain on the economy and thus making deficit spending appear superior. However, unless someone keeps all of his or her savings in cash, which is unusual, savings are invested, either by…You Suppose the government increases education spending by $20 billion. If the marginal propensity to consume is 0.75, how much will total spending increase? Instructions: Round your response to one decimal place. $ billionWhat is the eventual effect on real GDP if the government increases its purchases of goods and services by $75,000? Assume the marginal propensity to consume (MPC) is 0.75. $ What is the eventual effect on real GDP if the government, instead of changing its spending, increases transfers by $75,000? Assume the MPC has not changed. $ An increase in government transfers or taxes, as opposed to an increase in government purchases of goods and services, will result in an identical eventual effect on real GDP. no change to real GDP. a larger eventual effect on real GDP. a smaller eventual effect on real GDP.
- To assume that the structural model of an economy is given below : C = 100+0.75 Ya %3D | = 200 %3D G = T = 100 TR = 50 where G is government expenditure on goods and services, Tis lump sum tax and TR are transfer payments. (1) Find the equilibrium level of income. (2) Calculate Government expenditure multiplier and transfer payments multiplier. What is the difference between the two ?In the Savings-Investment model, what is the effect of an increase in government spending on investment? Why?1. In the Keynesian model, suppose that the economy has the following values : C = 100 + 0.75*Y G = 300 I = 200 NX = 0 (remember Y = GDP = C + I + G + NX) a) Solve for the level of equilibrium output in this economy. b) What is the MPC in this economy? What is the multiplier on government spending? (I want a specific number here, not a definition) c) Household savings is defined as income minus consumption (S = Y – C). What is the level of household savings in this economy? d) Suppose that households become nervous about the future of the economy and decide that they will consume less and save more money, so their new consumption function becomes C = 100 + 0.6*Y Solve for the new equilibrium level of output and calculate how much households end up saving. How has it changed from the level of savings in part c? e) How much does the government needs to increase its spending by to counteract the fall in economic output in this model?
- Which of the following is not a valid point in debating the merits of increasing government expenditures or cutting taxes during a recession? a. A cut in the marginal tax rate increases the incentives to find a job and work longer hours. b. Consumers will save a portion of a tax cut. c. The government may use the increase in expenditures on projects with little value, particularly, if it wishes to respond quickly. d. There is no evidence that tax cuts have been followed by increases in economic growth.posting this again, can you tell me which questions i've gotten wrong? i dont need any explanations for the ones i've gotten right. i just dont know which ones i've missed- if you could explain those that'd be fantastic. thanks 4- Tax cuts in the classical range of the AS will stimulate output and unemployment -false 5- Increasing welfare payments by borrowing money to do so will increase AD- true 6- if the mpc increases, the multiplier decreases- false 7- if the mps increases the multiplier decreases -true 8- part of the cost of growing government budget deficits is and “opportunity cost” of what else could have been done with the money, particularly if the borrowing is used to increase consumption spending. -true 9- tax cuts in the classical range of the AS curve will stimulate output and employment. -true 10- if the AS curve were flat/horizontal an increase in AD would not be inflationary- true 11- an increase in AD might be cause by improving technology in manufacturing processes.…Suppose we have the following information for the simple (fixed r, fixed P, fixed W) Keynesian model. C = 400 + 0.8 I = 310 G = 140 = 400 + 0.8 (Y - T) T = 200, where C is the consumption function, (Y - T) is disposable income, I is investment, G is government spending, and T is taxes. What is equilibrium income ($output), Ye ? Group of answer choices A) $5,050 B) $3,450 C) $6,900 D) $2,050 E) $5,450
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