Using the graph below, assume Yf=$14.2 Trillion and Y1 = $14.9 Trillion, then with an MPC of 93%, what would Keynes recommend the government does?ASLRASSR1PLP1-P2-AD1YfY1RGDP = Ya. The government should cut its spending by $700 billionO b. The government should cut its spending by $49.01 billionOc. The government should increase its spending by $700 billion◇ d. The government should increase its spending by $49.01 billion

From the graph we can get that,Full employment output, Yf = $14.2 trillionCurrent output, Y1 = $14.9…

Answered: Using the graph below, assume Yf=$14.2…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the following income/expenditure diagram in the simple Keynesian model. If taxes, T, were increased, then Group of answer choices A) The Y = C+S+T line would shift to the right, and equilibrium Y would increase. B) the C+I+G line would shift downward, and equilibrium Y would decrease. C) The Y = C+S+T line would shift to the left, and equilibrium Y would decrease. D) neither of the lines would shift, and equilibrium Y would stay the same. E) the C+I+G line would shift upward, and equilibrium Y would increase.
A. Suppose you are given the following fixed-price Keynesian model: C=280 + 0.9Y. I-200 G=100 X3D200 M= 100 + 0.1Y. T= 100 a. Find the aggregate expenditure function. b. Find the equilibrium level of real GDP. C. What is the spending multiolier in this model? Tax multiplier? d. Show that leakages injections at equilibrium. e. If taxes increase by $100, what is the new equilibrium level of GDP? E. Show your answers to b) and e) graphically.
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In the simple Keynesian model, evaluate the multiplier of public expenditures, the multiplier of taxes and the multiplier of transfer expenditures in terms of their effects. Why is the difference in effects caused? Explain.
TRUE - OR - FALSE Government purchases and income taxes will have the same effect on the multiplier. O True O False
Question 7. Suppose a closed economy with no government spending which in equilibrium is producing an output and income of 2300. Suppose also that the marginal propensity to consume is 0.80, and that, if at full employment, the economy would produce an output and income of 3750 By how much would the government need to cut taxes (T) to bring the economy to full employment? (round your answer to the nearest whole value) Your Answer: Answer View hint fr
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According to Keynesian economics, what impact would a balanced budget amendment to the constitution requiring the federal government to balance its budget annually have on the economy?
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