Suppose MPC is 0.8. If government purchases increases by $10a and cuts taxes by $503, how much the equilibrium output is changed. a= 5 and B=6
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- Suppose the MPC is 0.8. What is the tax multiplier in this economy? If the government were to lower taxes by $250 in this economy how much would Total Spending change as a result? Show your work.Suppose the MPC in an economy is 0.95. What should the government do with taxes if they want to increase Total Spending by $665? Show your workSuppose the MPC is 0.6. Beginning from equilibrium, investment demand rises by 30. (a) How much does equilibrium output increase? (b) How much of that increase is extra consumption demand?
- Give typing answer with explanation and conclusion Suppose that the typical Canadian spends 80 percent of their income. There is an income tax rate is 15% per period. If the government wanted to see the effect of a tax cut of $50 billion, what would be the tax multiplier that they would have to use.The President of Westeros hires you as an economic consultant. He is concerned that theoutput level in Westeros is too high and that this will cause prices to rise. He feels that it isnecessary to reduce output by $10 billion. He tells you that the MPC in Westeros is 0.6.Which of the following would be the best advice to give to the Westeros president?A) reduce government purchases by $4 billionB) increase taxes by $10 billionC) reduce government purchases by $10 billionD) increase taxes by $2.5 billionAssume that in the economy of Utrea, the MPC is 0.8 and the multiplier is 3 and that both government spending and autonomous taxes are increased by $40. In what direction and by how much will equilibrium GDP change?
- If government purchases are increased by S100, taxes are reduced by $100, and the MPC is 0.8, equilibrium output will change by Select one: Oa-5400 ob. an amount that cannot be determined from this information. OC $1,800 od.$900The formula for the government spending multiplier is A) 1/(1+ MPC). B) 1/MPS. O C) 1/MPC. OSuppose the government wishes to eliminate an inflationary gap of $100 billion and the MPC is 0.5. how much must the government cut its spending? b) what would be the effect of the government increasing taxes by this amount?
- Please helpAa30 EconomicsThe simple economy of Altria shown in the table below has no government or taxes and no international trade. Its investment is autonomous and its MPC is constant. a. Complete the table below. Remember to use a minus (-) sign to indicate negative values. Y S I AE 500 0 750 1,500 2,250 3,000 3,750 с 500 1,000 0 750 b. The value of expenditures equilibrium is $ c. The value of the multiplier is