EBK ESSENTIALS OF ECONOMICS
8th Edition
ISBN: 8220103599832
Author: Mankiw
Publisher: Cengage Learning US
expand_more
expand_more
format_list_bulleted
Question
Chapter 24, Problem 2CQQ
To determine
Relation between government purchases, tax, and aggregate
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Typed plzzzz And Asap
I vll up vote and share positive feedback
1
21. If taxes
a. increase, then consumption increases, and aggregate demand shifts leftward.
b. increase, then consumption decreases, and aggregate demand shifts rightward.
c. decrease, then consumption increases, and aggregate demand shifts rightward.
d. decrease, then consumption decreases, and aggregate demand shifts leftward.
Knowledge Booster
Similar questions
- If taxes are lowered, we can expect supply-side economists to support the decision to do so because a. government revenues will increase in the long run. b. government spending will decrease in the long run. c. the government will spend more in the short run. d. economic growth cannot occur without it.arrow_forwardsupply-side economists believe that a reduction in the tax rate a. always decrease government tax revenue b. shifts the aggregate supply curve to the right c. would decrease consumption d. provides no incentive for people to work more d. provides no incentive for people to work morearrow_forwardAn increase in taxes would be a good policy A. when there is stagflation, as this policy would push aggregate supply to the right. B. during a recession, as this policy would stimulate aggregate demand. C. during a recession, as this policy would reduce aggregate supply. D. when there is inflation, as this policy would push aggregate demand to the left. E. when there is inflation, as this policy would push aggregate demand to the right. QUESTION 20 An increase in the price level will A. shift the aggregate demand curve to the left. B. shift the aggregate supply curve to the left. C. move the economy down along a stationary aggregate supply curve. D. shift the aggregate demand curve to the right. E. move the economy up along a stationary aggregate demand curve.arrow_forward
- Explain the effect of tax increases on savings on aggregate supply using the model of the macroeconomy. Price Level (average price per unit of output) AS Output (real GDP per period) The results are that a. the equilibrium rate of output (Click to select) b. the equilibrium price level (Click to select) ✓ c. unemployment (Click to select) V ADarrow_forwardEqual increases in government purchases and in net taxes have equal but opposite effects on the level of real GDP demanded. a. True b. Falsearrow_forwardIf the government wants to expand aggregatedemand, it can _________ government purchases or_________ taxes.a. increase; increaseb. increase; decreasec. decrease; increased. decrease; decreasearrow_forward
- Consider two policies, a tax cut that lasts for only 2 years and a tax cut that is expected to be permanent. Which policy will stimulate greater spending by consumers? Which policy will have the greater impact on aggregate demand? Select one: a. permanent tax cut; 2-year tax cut b. permanent tax cut; permanent tax cut c. 2-year tax cut; 2-year tax cut d. 2-year tax cut; permanent tax cutarrow_forwardQUESTION 25 A tax cut shifts the aggregate demand curve the farthest if a. the MPC is large and if the tax cut is temporary b. the MPC is large and if the tax cut is permanent c. the MPC is small and if the tax cut is permanent d. the MPC is small and if the tax cut is temporaryarrow_forwardAssuming the economy is in long run and the govt implemnents a tax cut of $420 Billion, there is no crowding out, and marginal propensity to consume is 0.9 what's the initial and total effect of the tax reduction on aggregate demand? Is there a formula to calculate this?arrow_forward
- Someone answer this question ASAP without explanantionA tax cut shifts aggregate demand A. by less than the tax cut. B. by the same amount as the tax cut. C. None of the options are correct. D. by more than the amount of the tax cut.arrow_forwardQuestion 16 The economy is in a recession The governiment enacts a policy to increase the real GDP by $10 billion The MPS is 02 Assuming that the aggregate supply curve is horizontal across the range of GDP being considored, by how much should the government change spending or taxes in order to achieve its objective? Show your cacutationsarrow_forwardAssume an economy that is operating above full employment. Draw a correctly labeled aggregate demand and aggregate supply graph and show each of the following: a. The long-run aggregate supply curve. b.Current price level and output levels, labeled PLe and Ye c. Full employment output, labeled Yf 2. Identify one fiscal policy action that could resolve the problem. 3. Using your graph in question 1, show the short-run effects of the action you identified on each of the following: a. Aggregate demand. Explain (use the cause and effect chain you learned in the lesson) b. Output c. Price Level 4. Using a correctly labeled loanable funds graph, show the effect of the policy you identified in question 2 on real interest rates. 5. Given the change in the real interest rate in question 4. What is the impact on each of the following? a. Investment…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Macroeconomics (MindTap Course List)EconomicsISBN:9781285165912Author:N. Gregory MankiwPublisher:Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours...EconomicsISBN:9781337091985Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou...EconomicsISBN:9781285165875Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Macroeconomics (MindTap Course List)EconomicsISBN:9781305971509Author:N. Gregory MankiwPublisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Macroeconomics (MindTap Course List)
Economics
ISBN:9781285165912
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours...
Economics
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou...
Economics
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Macroeconomics (MindTap Course List)
Economics
ISBN:9781305971509
Author:N. Gregory Mankiw
Publisher:Cengage Learning