Which of the following is an appropriate fiscal policy response to a negative GDP gap?   a. raise income tax rates   b. increase government spending   c. raise real interest rates   d. lower real interest rates

Q: suppose the government wishes to illuminate recessionary of a gdp of 100 billion in the MPC is .075.…

A: To calculate increase in government spending we have to first calculate the spending multiplier.

Q: Assume there is a decrease in the aggregate demand, if expansionary fiscal policy is being used, the…

A: Fiscal policy is the kind of policy using which government adjusts its spending levels and tax rates…

Q: The government of a country decides to double its current level of spending, causing real GDP to…

A: Gross domestic product (GDP): - GDP is the market value of all final goods and services produced in…

Q: Suppose real GDP is currently $12.5 trillion and potential real GDP is $13 trillion. If the…

A: Aggregate demand is the sum of consumption spending, Investment spending, Government spending  and…

Q: Who is in charge of fiscal policies, and how do their different multipliers work?

A: The fiscal policy is the use of the government budget to affect an economy. when the government…

Q: ist the 3 major economic goals of fiscal policy.   Who is responsible for fiscal policy?

A: Since you have multiple questions, I would be answering the first two. If you want any specific…

Q: T/F/U. To counterbalance a decrease in investment during a recession, governments offer tax credits…

A: The macroeconomic tools which the government uses to  intervene and correct any imbalances in the…

Q: Use the following equations for exercises                                                     C = $…

A: C = $ 100 + .8 Y  I = $ 200  G = $ 250  X = $100 - .2 Y b=MPC = 0.8 GDP = C+ I + G + X GDP (Y)= 100…

Q: How do you recommend the government change GDP and taxes to stabilize the economy in each of the…

A: In an economy, government intervenes at the marketplace with its economic policies to deal with the…

Q: Which of the following is not a valid point in debating the merits of increasing government…

A: In the debate about the merits of increasing government expenditures or cutting taxes during a…

Q: The government is considering raising the tax rate on labor income. Explain the supply-side effects…

A: Higher tax rates on labour income and consumption expenditures contribute to less time spent working…

Q: An increase in income taxes _______ the tax wedge, and an increase in taxes on consumption…

A: Tax wedge refers to a net difference in gross income and net income after deduction of taxes. Thus…