Use the green points (triangle symbols) to draw the new total expenditure line on this graph given the tax increase through a fixed tax previouslydiscussed and subsequent changes in the consumption schedule shown on the preceding graph.REAL EXPENDITURE (Billions of dollars)10090807060504030201000102045-degree lineTotal Expenditure3040 50 60 70REAL GDP (Billions of dollars)TrueO False80 90 100TE with tax increase through a fixed taxTE with tax increase through a variable taxSuppose that the government also considered a variable tax hike and that the resulting consumption schedule would have also passed through oneblack point (plus symbols) on the left and one black point on the right on the first graph (though not necessarily the same points as the consumptionschedule resulting from the tax increase through a fixed tax).(?)On the first graph, use two purple points (diamond symbol) to connect the two black points (plus symbols) representing the consumption schedulethat would result from a tax increase through a variable tax. (Hint: As before, the consumption schedule must pass through one point on the leftand one point on the right.)On the second graph, use the purple points (diamond symbols) to draw the total expenditure line that would result from a tax increase through avariable tax indicated on the top graph.True or False: The change in equilibrium output is greater when the government implements the variable tax hike. 6. Graphical treatment of taxes and fiscal policyThe main difference between variable taxes and fixed taxes is that unlike fixed taxes, variable taxesThe following graph shows the consumption schedule for an economy with a given level of taxes. Suppose the government implements a taxincrease through a fixed tax.Use two green points (triangle symbol) to connect the two black points (plus symbols) representing the consumption schedule after the change intaxes.Hint: The new consumption schedule must pass through one point on the left and one point on the right.REAL CONSUMER SPENDING (Billions of dollars)8403080+ ++O+++204060REAL GDP (Billions of dollars)80+O+100Consumption with Tax Increase through a Fixed TaxConsumption with Tax Increase through a Variable TaxThe blue line on the next graph represents the original total expenditure line for this economy before the change in tax structure.Use the new consumption line you just plotted to calculate the new total expenditure at two levels of real GDP and fill in the following table.GDP levelTotal Expenditure(Billions of dollars)(Billions of dollars)1090

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Use the new consumption line you just plotted to calculate the new total expenditure at two levels of real GDP and fill in the following table. GDP level Total Expenditure (Billions of dollars) (Billions of dollars) 10 90

Use the new consumption line you just plotted to calculate the new total expenditure at two levels of real GDP and fill in the following table. GDP level Total Expenditure (Billions of dollars) (Billions of dollars) 10 90

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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GDP is a strong measure of the health of the economy, and it’s among the most important and widely reported economic data. · In your own words, summarize nominal GDP. · Discuss the limitations of gross domestic product (GDP) as a measurement tool. · What is the difference between real and nominal GDP? · Locate an online news article that discusses impacts to GDP in some way. Summarize the article and explain its relation to/impact on GDP. · Cite your sources.
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