According to the Ricardian equivalence proposition, a government budget decit created by a O reduces desired investment spending O increases the real interest rate. O does not affect expected future taxes.
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- If, Autonomous Private Final Consumption Expenditure = $ 13,500, Exports = $ 5000 Government Final Consumption Expenditure = $ 6800 Government Investment Expenditure = $ 8900 Marginal Propensity to Import = 0.1, Marginal Propensity to Save = 0.25, Tax rate = 20% If Government increases its Investment Expenditure by $ 12,000, what is Marginal Propensity to Consume?Consider a closed economy with fixed prices and wages. Suppose consumption function takes the form C = 150+0,8Yd, Investments are I = 200, government purchases are G = 350, tax rate t= 0,1. There are no lump-sum taxes. (a) Calculate equilibrium output and Budget Deficit. Plot the planned aggregate spending line and show the equilibrium output. (b) If the Government decides to balance the Budget by changing the tax rate, what new tax rate the Government need to implement? (c) Calculate the new equilibrium output after the change in tax rate. Show how changes in the tax rate affect the planned aggregate spending line and new equilibrium output.Please no written by hand solution If, Autonomous Private Final Consumption Expenditure = $ 12,000, Exports = $ 5000 Investment Expenditure = $ 4500, Government Final Consumption Expenditure = $ 6800 Government Investment Expenditure = $ 8900 Marginal Propensity to Import = 0.4, Marginal Propensity to Save = 0.25, tax rate = 15% If Government increases its Investment Expenditure by $ 11,000, what would be in Real GDP (Income = Y)?
- Suppose the GDP of a country with a closed economy is $22 trillion, (net) taxes are $4.2 trillion, public saving is $0.8 trillion, and private saving is $1.3 trillion. What are the values of consumption, investment, national saving, and government spending? 1b Is the government of this country running a budget surplus or a deficit?An open economy with a government sector is in equilibrium. Assume the following: Marginal propensity to save = 0.4 Marginal propensity to tax = 0.2 Marginal propensity to import = 0.2Showing your method of working, calculate by how much the equilibrium level of national income would fall, if injections in the economy are reduced by $60m.Assume an economy with no foreign sector, a marginal propensity to save of mps = 0.1, and a marginal income tax rate of t = 1/3. What change in government purchases would lead to an increase in national income of 500?
- The macroeconomic effects of federal investment can decrease if : a.State and local governments tax investment spending towards other non-investment areas. b.State and local governments complement federal policy by also increasing investment. c.State and local governments keep local investment spending unchanged. d.State and local governments substitute investment spending towards other non-investment areas.1) The government's budget deficit increases, and at the same time the trade deficit grows. This will lead to a(n) _____ in the demand and a(n) _____ in the supply of loanable funds in domestic markets. increase; increase decrease; increase decrease; decrease 2) A temporary decrease in government purchases would cause: a rightward shift in the saving curve and a leftward shift in the investment curve. a rightward shift in the saving curve and a rightward shift in the investment curve. no shift in the saving curve, but a leftward shift in the investment curve.5. a) What is automatic stabilizer in this context of fiscal policy? Explain with examples b) What is time inconsistency problem? Give two eamples of time inconsistency problem that are not in your book. c) What is real exchange rate? Explain with a hypothetical example.
- Can you please answer question 35, please? No explanation needed. Thanks in advance. 35) When a country has public-sector net borrowing, it means that A) the government has accumulated debt over a number of years. B) the total expenditure of central government, local government and public corporations exceeds the tax revenues and sales revenues collected by those bodies. C) central government's spending exceeds its tax receipts. D) nationalised industries are being subsidisedIf net taxes exceed government expenditures, the government sector has a budget ________ and government saving is ________. A) surplus; positive B) surplus; negative C) deficit; positive D) deficit; negative If the government's budget deficit increases and the Ricardo-Barro effect does not apply, A) the real interest rate rises. B) investment increases C) investment decreases D) Both answers A and C are correct.Assume and economy is in recession and the government is considering using fiscal stimulus measures to boost spending , production and employment. a)Explain how "crowding out" can harm productivity growth b) explain how the crowding out problem associated with increase government spending can be avoided. identify any additional policy needed.
