Question 29 The full-employment level of output is $6000 above the current level of output. The marginal propensity to consume is 0.75. Dragged and dropped options on the right-hand side will be automatically saved. For keyboard navigation... SHOW MORE ✓ How much should the government change taxes if they want the bring the economy back to the full-employment level of output? = $1200 How much should the government change government expenditures if they want the bring the economy back to the full-employment level of output? = -$1200 Assume the government carries out the actions that bring the economy back to full-employment. What is the most likely event? $1500 Σ M Output decreases and returns to Y-bar. =U $1500 = Prices decrease and return to P-bar. = Prices increase and return to P-bar. $2000 M M M 2 How much should the government change government expenditures if they want the bring the economy back to the full-employment level of output? -$1200 Output decreases and returns to Y-bar. Assume the government carries out the actions that bring the economy back to full-employment. What is the most likely event? $1500 III $1500 III = Prices decrease and return to P-bar. III Prices increase and return to P-bar. $2000 = -$2000 = Output increases and returns to Y-bar.
Question 29 The full-employment level of output is $6000 above the current level of output. The marginal propensity to consume is 0.75. Dragged and dropped options on the right-hand side will be automatically saved. For keyboard navigation... SHOW MORE ✓ How much should the government change taxes if they want the bring the economy back to the full-employment level of output? = $1200 How much should the government change government expenditures if they want the bring the economy back to the full-employment level of output? = -$1200 Assume the government carries out the actions that bring the economy back to full-employment. What is the most likely event? $1500 Σ M Output decreases and returns to Y-bar. =U $1500 = Prices decrease and return to P-bar. = Prices increase and return to P-bar. $2000 M M M 2 How much should the government change government expenditures if they want the bring the economy back to the full-employment level of output? -$1200 Output decreases and returns to Y-bar. Assume the government carries out the actions that bring the economy back to full-employment. What is the most likely event? $1500 III $1500 III = Prices decrease and return to P-bar. III Prices increase and return to P-bar. $2000 = -$2000 = Output increases and returns to Y-bar.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Question 29
The full-employment level of output is $6000 above the current level of output. The marginal propensity to consume is 0.75.
Dragged and dropped options on the right-hand side will be automatically saved. For keyboard navigation... SHOW MORE ✓
How much should the government change taxes if they
want the bring the economy back to the full-employment
level of output?
=
$1200
How much should the government change government
expenditures if they want the bring the economy back to
the full-employment level of output?
=
-$1200
Assume the government carries out the actions that bring
the economy back to full-employment. What is the most
likely event?
$1500
Σ
M
Output decreases and returns to Y-bar.
=U
$1500
=
Prices decrease and return to P-bar.
=
Prices increase and return to P-bar.
$2000
M
M
M 2
Transcribed Image Text:How much should the government change government
expenditures if they want the bring the economy back to
the full-employment level of output?
-$1200
Output decreases and returns to Y-bar.
Assume the government carries out the actions that bring
the economy back to full-employment. What is the most
likely event?
$1500
III
$1500
III
=
Prices decrease and return to P-bar.
III
Prices increase and return to P-bar.
$2000
=
-$2000
=
Output increases and returns to Y-bar.
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