If the AD shortfall is $700 billion and the MPC is 0.95,(a) How large is the desired fiscal stimulus? Please enter the answer in billions, whole numbers only.
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If the AD shortfall is $700 billion and the MPC is 0.95,(a) How large is the desired fiscal stimulus? Please enter the answer in billions, whole numbers only.
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- If the AD shortfall is $800 billion and the MPC is 0.8,a) How large is the desired fiscal stimulus?b) How large an income tax cut is needed?c) Alternatively, how much more government spending would achieve the target?Why will a temporary tax increase be insignificant in reducing consumption expenditures by the amount expectedIf the AD excess is $400 billion and the MPC is 0.9,a) How much fiscal restraint is desired?b) By how much do income taxes have to be increased to get that restraint?
- If the AD excess is $300 billion and the MPC is 0.75, Instructions: Enter your responses as whole numbers. a. How much fiscal restraint is desired? $ |billion b. By how much do income taxes have to be increased to get that restraint? 2$ |billion c. Alternatively, how much should government reduce its spending to achieve the target? 2$ billionIf the AD excess is $300 billion and the MPC is 0.75. Instructions: Round your responses to one decimal place. a. how much fiscal restraint is desired? billion b. by how much do income taxes have to be increased to get that restraint? billion c. alternatively, how much should government reduce its spending to achieve the target? billionThere is an inflationary gap of $200 billion in the economy. The MPC is 90%. What is the MPS [Select] and the Government Spending Multiplier [Select] the Government need to [Select] much [Select] change taxes, would they [Select] the Tax multiplier [Select] [Select] ? Would spending? By how ? If the Government decided to taxes? What is and by how much
- QUESTION 3 3. If the AD shortfall is $800 billion and the MPC is 0.8, a) How large is the desired fiscal stimulus? b) How large an income tax cut is needed? c) Alternatively, how much more government spending would achieve the target? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). B I U S ParagraphDescribe the supply-side effects of a fiscal stimulus and explain how a tax cut will influence potential GDP.a) What are the three fiscal policy tools and how would each be used to counter a contractionary gap? b) True or False and explain: Fiscal Policy is effective at reducing the duration of an economic contraction. c) If the spending multiplier is 2.5 and the economy is in a $500 billion contractionary gap, how much should I increase government purchases to eliminate the gap? d) Continuing with c, if the MPC is 0.8, how much would I need to increase transfer payments to eliminate the $500 billion contractionary gap? e) True or False and explain: Households always react to tax changes in a predictable manner. Module 6: Deficits and the Debt. a) Distinguish between deficit and debt. b) Explain what crowding out is and why it reduces the impact of fiscal stimulus. c) True or false and explain: The national debt represents a threat of bankruptcy. (For d and e) Suppose the interest on the debt was $600 billion. If interest is paid domestically, 90% will be spent domestically (the remainder is…
- Suppose the economy is operating at equilibrium, with Yo=1,000. If the government undertakes a fiscal change whereby the tax rate, t , increases by .05 and government spending increases by 50, will the budget surplus go up or down? Why?If the AD excess is $100 billion and the MPC is 0.5 Instructions: Enter your responses as whole numbers. (a) How much fiscal restraint is desired? $ billion (b) By how much do income taxes have to be increased to get that restraint? $ billionAssuming 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?
