Assume the MPC is 0.8. Assuming only the multiplier effect matters, a decrease in government purchases of $100 billion will shift the aggregate demand curve to the:__________a. left by $180 billion. b. left by $500 billion. c. right by $180 billion. d. right by $400 billion.
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Assume the MPC is 0.8. Assuming only the multiplier effect matters, a decrease in government purchases of $100 billion will shift the aggregate demand curve to the:__________a. left by $180 billion.
b. left by $500 billion.
c. right by $180 billion.
d. right by $400 billion.
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- A. Assume that a hypothetical economy with an MPC of .75 is experiencing severe recession. By how much would government spending have to rise to shift the aggregate demand curve rightward by $70 billion? B. How large a tax cut would be needed to achieve the same increase in aggregate demand?Suppose that an economy is in equilibrium at a real GDP of $10 trillion at a price level of 100. An increase in autonomous expenditures of $0.30 trillion takes place. The current multiplier is 10. If the short-run aggregate supply curve is horizontal, the new equilibrium value of real GDP will be A. $0.30 billion. B. $3.00 trillion. C. $13.00 trillion. D. $10.30 trillion. Suppose that an economy is in equilibrium at a real GDP of $10 trillion at a price level of 100. The short-run aggregate supply curve is upward-sloping and there is an increase in autonomous expenditures of $0.30 trillion. This increase in expenditures enabled the real GDP to increase to $10.50 trillion. The change in the price level has changed the multiplier to A. 1.667. B. 9.70. C. 8.58. D. 5.722.Suppose the consumption function is C-$700 billion +0.8Y and the government wants to stimulate the economy. By how much will aggregate demand at current prices shift initially (before multiplier effects) with Mc raw Instructions: Enter your responses as a whole number. a. a $30 billion increase in government purchases? $ billion b. a $30 billion tax cut? $ c. a $30 billion increase in income transfers? billion $ What will the cumulative AD shift (after multiplier effects) be for d. the increased government spending? $ e. the tax cut? F stly clear billion billion billion f the increased transfers? $[ billion ▬▬▬ Q Search D < Prev W 1 of 5 C
- Suppose the consumption function is $800 billion +0.8y and the government wants to stimulate the economy. By how much will aggregate demand at current prices shift initially (before multiplier effects) with: a. A $50 billion increase in government purchases b. A $50 billion tax cut c. A $50 increase from income transfers what will the cumulative ad shift be for: d. The increased government spending e. The tat cut f. The increased transfersA. 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.How do induced taxes and needs-tested spending change during a recession? What is the effect of induced taxes and needs-tested spending on the multiplier effects of changes in autonomous expenditure? Induced taxes _______ during a recession. Needs-tested spending _______ during a recession. A. decrease; increase B. increase; decrease C. increase; increase D. decrease; decrease Induced taxes and needs-tested spending _______ the multiplier effects of changes in autonomous expenditure. A. sometimes increase and sometimes decrease B. do not influence C. increase D. decrease
- Assume that a hypothetical economy with an MPC of 0.9 is experiencing severe recession. a. By how much would government spending have to rise to shift the aggregate demand curve rightward by $40 billion? How large a tax cut would be needed to achieve the same increase in aggregate demand? b. Determine one possible combination of government spending increases and tax increases that would accomplish the same goal without changing the amount of outstanding debt. increase spend by increase tax byAssume that the short run equilibrium GDP is $4,000 billion and the potential GDP is $5,000 billion. The marginal propensity to consume is 0.8. [a] Would you classify this society more inclined to consume or save? Explain . [b] By how much would you advise the President to adjust the government spending and the taxes? Show your work.1. According to the Keynesian cross model, if the murginal propensity to consume is 2/3, an increase in government purchases of $120 billion increases equilibrium income by $360 billion. $240 billion $160 billion. $180 billion.
- 60. Assume a recessionary gap of $300 B exists in the U.S. macroeconomy. Also assume that the MPC .80. How much do taxes need to change and do the change in taxes represent an increase or a decrease? (Use simple multiplier formula) A. $100 B, increase B. $300 B, increase C. $75 B, decrease D. $62 B, increaseIncome is 678 Trillion and consumption is 662 Trillion then income increases to 698 Trillion and consumption increases to 677 Trillion. What will the marginal propensity to consume be? .8 Using the information and the calculations from question seven what will the multiplier be 4 Using the information and the calculations from questions seven and eight and given a full employment level of aggregate expenditure GDP of 600 and a current level of aggregate expenditure of 560 how much would government spending have to change to regain the full employment level of GDP Increase in government spending of 8 Decrease in government spending of 8 Increase in government spending of 10 Decrease in government spending of 10 None of the above Using the information and calculations form questions seven, eight, and nine how much would government taxes have to change by in order to regain the full employment level of GDP Increase taxes by 8 Lower taxes by 8 Increase taxes by…Given the following information, answer the question. Autonomous consumption = R100 million Investment spending = R300 million Government spending = R200 million Taxes = R60 million Marginal propensity to consume = ¾ The equilibrium level of output and income is equal to ______. Select one: A. R2 160 million B. R2 580 million C. R2 640 million D. R2 220 million