You are given the following information about aggregate demand at the existing price level for an economy: (1) consumption = $300 billion; (2) investment = $50 billion; (3) government purchases = $100 billion; and (4) net export = $20 billion. If the full- employment level of GDP for this economy is $620 billion, then what combination of actions would be most consistent with closing the GDP-gap here? O Increase government spending and taxes O Increase government spending and decrease taxes O Decrease government spending and increase taxes O Decrease government spending and taxes

You are given the following information about aggregate demand at the existing price level for an economy: (1) consumption = $300 billion; (2) investment = $50 billion; (3) government purchases = $100 billion; and (4) net export = $20 billion. If the full- employment level of GDP for this economy is $620 billion, then what combination of actions would be most consistent with closing the GDP-gap here? O Increase government spending and taxes O Increase government spending and decrease taxes O Decrease government spending and increase taxes O Decrease government spending and taxes

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 taxes fall and government spending rises by the same amount, there is very little change in GDP. O True O False
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QUESTION 16 If the marginal propensity to save is 0.1, the marginal propensity to import is 0.1 and the marginal tax rate is 0.2, how much would consumption increase if income rises by £8billion? O a. 4.8 O b. 13.3 O c. 3.2 O d. 20 4
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