3*Options for a) are: recessionary or inflationary*Options for d) are: deficit or surplus The economy of Morin is shown in the figure below.The Economy of MorinADAS170150-130-110 -90 -70+ (480, 80480480500520540560580600Real GDPa. If potential GDP (LAS) is $580, and the economy is presently in equilibrium, then there is a(n) (Click to select) ♥ gap of $|billion.b. In order to close this gap aggregate demand must increase by $billion.c. If every $1 change in government spending leads to a $4 change in aggregate demand, government spending must increase by $|billion.d. Suppose that initially government had a balanced budget. If government increases its spending as in part (c) and tax revenues are0.25 of real GDP, what will be the government's real budget surplus/deficit at full-employment equilibrium?The government budget would have a (Click to select) v of $billion.Price Level

a. Potential GDP is denoted by the Long-run Average Cost. It is given that potential GDP (Y*) is…

The economy of Morin is shown in the figure below. The Economy of Morin AD AS 170- 150- 130- 110- 90 - 70 460 (480. 80) 500 520 480 540 560 580 600 Real GDP a. If potential GDP (LAS) is $580, and the economy is presently in equilibrium, then there is a(n) [(Click to select) ♥ gap of o. In order to close this gap aggregate demand must increase by $ [ |billion. E. If every $1 change in government spending leads to a $4 change in aggregate demand, government spending must ]billion. d. Suppose that initially government had a balanced budget. If government increases its spending as in part (c) and tax 0.25 of real GDP, what will be the government's real budget surplus/deficit at full-employment equilibrium? The government budget would have a (Click to select) ♥ of $ [ |billion. Price Level

The economy of Morin is shown in the figure below. The Economy of Morin AD AS 170- 150- 130- 110- 90 - 70 460 (480. 80) 500 520 480 540 560 580 600 Real GDP a. If potential GDP (LAS) is $580, and the economy is presently in equilibrium, then there is a(n) [(Click to select) ♥ gap of o. In order to close this gap aggregate demand must increase by $ [ |billion. E. If every $1 change in government spending leads to a $4 change in aggregate demand, government spending must ]billion. d. Suppose that initially government had a balanced budget. If government increases its spending as in part (c) and tax 0.25 of real GDP, what will be the government's real budget surplus/deficit at full-employment equilibrium? The government budget would have a (Click to select) ♥ of $ [ |billion. Price Level

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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19. Gross investment is the total amount spent on purchases of new capital and on replacing depreciated capital. True or false 21. Fiscal policy has important effects on the level of employment, nominal GDP and on aggregate supply, known as secondary supply effects. True or false 23. An increase in government spending is an expansionary fiscal policy. True or false
28. Which of the following policies might provide a remedy when the equilibrium output in an economy is above the potential level of output? a. Increase government spending. b. Decrease the federal funds rate. c. Increase transfer payments. d. Raise taxes. e. Buy more government securities.
1. A college wants to produce an effigy for the student carnival. Preliminary studiesmade it possible to establish that the production of these effigies requires fixed costs of $2,008and variable costs (materials, labor, energy) of $0.90 per effigy. One of therequirements of the college being not to make a deficit, he had a market study carried out.It appears from this study that by selling these effigies for $3.75 we can hope to sell them1,000, whereas by setting the price at $2.50, the potential sales are 3,000.a) Express the demand in terms of the selling price and representgraphically this function.b) Express the cost of production as a function of the selling price.c) Express the income in terms of the selling price and determine the price that thecollege should fix to maximize the income from this sale of effigies.d) Represent the income function and the cost function on the same system of axesand determine the prices corresponding to the break-even thresholds and numbereffigies…
4. Deficits in new classical economics Felix lives in the fictional country of Lindelof, which raises government revenue by taxing everyone the same amount. The government of Lindelof has just implemented a tax cut that reduces annual taxes by $3,500 per person. However, government spending has not changed, nor is it likely change in the future. The tax cut has raised Felix's income by $3,500. If Felix acts according to the prediction of new classical economics (and doesn't plan to leave Lindelof), his consumption is likely to increase by Suppose that instead of cutting taxes while keeping its spending the same, the government did the opposite: it increased its spending by $3,500 per person while keeping taxes the same. If everyone in Lindelof acted like Felix, the likely increase in aggregate demand would be per person.
Assume that the economy experiences very high increasing energy prices. 1. Explain about what counter cyclical fiscal policy should be used. (Use the macroeconomic approach and include diagram)
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6. Use the following table to answer these questions: Y C I G X $ 500 $ 500 $ 10 $ 20 $ 60 $ 600 $ 590 $ 10 $ 20 $ 40 $ 700 $ 680 $ 10 $ 20 $ 20 $ 800 $ 770 $ 10 $ 20 $ 0 $ 900 $ 860 $ 10 $ 20 - $ 20 $ 1,000 $ 950 $ 10 $ 20 - $ 40 a.What is the Marginal Propensity to Import? b.What is the Marginal Propensity to Invetst? c.What the difference between both of…
34. Discretionary fiscal policy refers to A) deliberate government efforts to stabilize the economy through government spending and taxes. B) the use of automatic stabilizers and intervention policies to stabilize the economy. C) any government policy that requires a lag period of at least three months. D) the deliberate use of government spending and taxes to complement the effects of monetary policy in an effort to stabilize the economy. 35. An inflationary gap can be closed with A) using an expansionary monetary policy. B) using a policy action such as a reduction in taxes. C) using a policy action such as a reduction in government purchases. D) imposing price controls to prevent prices from rising. 36. The term “crowding out” refers to the phenomenon that occurs when increased government spending A) raises the price level and reduces consumption. B)…
Please answer all question, it's really matter. ( not very long, just short understandable answers) 1. Does the US currently rely more on fiscal policy or monetary policy to stabilize the economy? 2. Does fiscal policy have an expansionary bias? explain 3. Does fiscal policy have an expansionary bias?
1. Optimal fiscal policy relies on the (a) Friedman rule (b) Laffer curve (c) model's productivity shocks (d) Federal Reserve Bank 2. In the short-run, money (a) does not enter into the representative consumer's utility function. (b) is non-neutral (because prices are rigid/sticky, often for long periods of time). (c) is the equivalent of holding a "riskless asset." (d) is used as a proxy for the pricing kernel in the sequential Lagrangian analysis.
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