Refer to columns 1 and 6 in the table below. a. Incorporate government into the table (in the gray-shaded cells) by assuming that it plans to tax and spend $20 billion at each possible level of GDP. Also assume that the tax is a personal tax and that government spending does not induce à shift in the private aggregate expenditures schedule. Instructions: Enter your answers as a whole number. (2) Aggregate Expenditures, Private Closed Economy, Billions (6) Aggregate Expenditures, Private Open Economy, Billions (7) Government Expenditures, Expenditures Billions (8) Aggrega (1) Real Domestic Output (GDP = DI), Billions (3) Exports, (4) Imports, (5) Net Exports, Billions Billions Billions Economy wi Government, Bi $200 $240 $20 $30 $-10 $230 250 280 20 30 -10 270 300 320 20 30 -10 310 350 360 20 30 -10 350 400 400 20 30 -10 390 450 440 20 30 -10 430 500 480 20 30 -10 470 550 520 20 30 -10 510 What is the change in equilibrium GDP caused by the addition of government? 20 billion

Refer to columns 1 and 6 in the table below. a. Incorporate government into the table (in the gray-shaded cells) by assuming that it plans to tax and spend $20 billion at each possible level of GDP. Also assume that the tax is a personal tax and that government spending does not induce à shift in the private aggregate expenditures schedule. Instructions: Enter your answers as a whole number. (2) Aggregate Expenditures, Private Closed Economy, Billions (6) Aggregate Expenditures, Private Open Economy, Billions (7) Government Expenditures, Expenditures Billions (8) Aggrega (1) Real Domestic Output (GDP = DI), Billions (3) Exports, (4) Imports, (5) Net Exports, Billions Billions Billions Economy wi Government, Bi $200 $240 $20 $30 $-10 $230 250 280 20 30 -10 270 300 320 20 30 -10 310 350 360 20 30 -10 350 400 400 20 30 -10 390 450 440 20 30 -10 430 500 480 20 30 -10 470 550 520 20 30 -10 510 What is the change in equilibrium GDP caused by the addition of government? 20 billion

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Fiscal Policy and Money Market

Fiscal policy is one of the important tools that is used by the government to control inflation or aggregate demand in the economy. Under this policy, there are two rules which are used by the government, one is the expenditure of the government and the other is the taxation or income of the government which it collects from the public.

Question

Refer to columns 1 and 6 in the table below.
a. Incorporate government into the table (in the gray-shaded cells) by assuming that it plans to tax and spend $20 billion
at each possible level of GDP. Also assume that the tax is a personal tax and that government spending does not induce à
shift in the private aggregate expenditures schedule.
Instructions: Enter your answers as a whole number.
(2) Aggregate
Expenditures,
Private Closed
Economy, Billions
(6) Aggregate
Expenditures,
Private Open
Economy,
Billions
(7)
Government Expenditures,
Expenditures
Billions
(8) Aggrega
(1) Real Domestic
Output (GDP = DI),
Billions
(3) Exports, (4) Imports, (5) Net Exports,
Billions
Billions
Billions
Economy wi
Government, Bi
$200
$240
$20
$30
$-10
$230
250
280
20
30
-10
270
300
320
20
30
-10
310
350
360
20
30
-10
350
400
400
20
30
-10
390
450
440
20
30
-10
430
500
480
20
30
-10
470
550
520
20
30
-10
510
What is the change in equilibrium GDP caused by the addition of government?
20 billion

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