The 2021 fiscal policy package included roughly $400 billion in stimulus payments that were sent to taxpayers. Assume the marginal propensity to consume (MPC) is 0.80. Instructions: Enter your responses as a whole number. a. By how much would it shift ultimately as a result of these rebates? 400 billion b. By how much would aggregate demand shift initially? 320 billion

The 2021 fiscal policy package included roughly $400 billion in stimulus payments that were sent to taxpayers. Assume the marginal propensity to consume (MPC) is 0.80. Instructions: Enter your responses as a whole number. a. By how much would it shift ultimately as a result of these rebates? 400 billion b. By how much would aggregate demand shift initially? 320 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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If the MPS in an economy is 0.1, government could shift the aggregate demand curve rightward by $40 billion by( please explain as well ) A) increasing government spending by $4 billion. B) increasing government spending by $40 billion. C) decreasing taxes by $4 billion. D) increasing taxes by $4 billion.
Instructions: Enter your answers as a whole number. B. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? $ billion b. If the MPC is 0.75, how much does government purchases need to change to shift aggregate demand by the amount you found in parta? $ billion Suppose instead that the MPC is 0.6. C. How much does aggregate demand and government purchases need to change to restore the economy to its long-run equilibrium? Aggregate demand needs to change by $ billion and government purchases need to change by $1 Price Level 160 140 120 100 80 60 40 20 0 LRAS (240,90) AD₁ billion. Real GDP (billions of dollars) AS AD 80 160 240 320 400 480 560 640 720 800
d. Now G assumes its original value of G = 800. Congress decreases the tax rate from (1/2) to (1/4). i) Use a model to sketch the effect of the decrease in the tax rate when the price level is held constant. ii) What is the new marginal propensity to consume? iii) Calculate the new equilibrium level of income.
A) Discuss, with examples, factors or events that might shift the short run aggregate supply curve. B) Imagine an economy is in long run equilibrium. Now suppose that firms experience an increase in their cost of production (say, due to a natural disaster). i. Explain, with graphs, the macroeconomic impact of such an increase in production costs. ii. Describe how policymakers could use fiscal policy to counteract the effects of increased cost of production.
The tax cuts of 2017 increased the 2018 disposable income of households by roughly $200 billion. If the MPC were 0.65, Instructions: Enter your responses as a whole number. a. how much of this windfall was initially saved? $ billion b. how much AD stimulus resulted over time after all multiplier effects? $ billion When I work through (b), I get the answer of 1300 billion, but it state it is incorrect.
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In 2006, the U.S. economy experienced an inflationary gap when the economy was booming and the unemployment rate was low. Would you consider a tax increase in that period to be demand-side focused, supply-side focused or both? What would be the impact of this policy on the price level and the real GDP? Explain.
How does the aggregate demand and supply model reflect a decrease in taxes? Select one: a. Consumption increases, so aggregate demand shifts right. b. Consumption increases, so aggregate supply shifts right. c. Consumption decreases, so aggregate supply shifts left. d. Consumption decreases, so aggregate demand shifts left. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
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