Suppose the economy is in a recession. The economy needs to expand by at least $450 billion, and the marginal propensity to consume is 0.7. What is the least amount the government can spend to overcome the $450 billion
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Suppose the economy is in a recession. The economy needs to expand by at least $450 billion, and the marginal propensity to consume is 0.7.
What is the least amount the government can spend to overcome the $450 billion gap?______
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- The following graph shows the aggregate demand curve. Shift the aggregate demand curve on the graph to show the impact of a tax hike. (?) 130 Aggregate Demand 120 110 100 90 Aggregate Demand 80 70 10 20 30 60 OUTPUT Suppose the governments of two different economies, economy J and economy K, implement a permanent tax cut of the same size. The marginal propensity to consume (MPC) in economy J is 0.85 and the MPC in economy K is 0.8. The economies are identical in all other respects. The tax cut will have a larger impact on aggregate demand in the economy with the PRICE LEVEL_______ 10) National bills must always be proposed by members of Congress.Give typing answer with explanation and conclusion Suppose that the typical Canadian spends 80 percent of their income. There is an income tax rate is 15% per period. If the government wanted to see the effect of a tax cut of $50 billion, what would be the tax multiplier that they would have to use.
- 10) Fiscal policy is defined as changes in federal ________ and ________ to achieve macroeconomic objectives such as price stability, high rates of economic growth, and high employment. A) taxes; interest rates B) taxes; expenditures C) interest rates; money supply D) taxes; money supplyCritically evaluate the impending rise of sales tax planned by the Japanese government and its effect on the demand and eventually public spendingNot written by hand solution Suppose that the typical Canadian spends 70 percent of their income. There is an income tax rate is 8% per period. If the government wanted to see the effect of a tax cut of $80 billion, what would be the tax multiplier that they would have to use. **Make sure that your answer is a number that is rounded to two decimal places. For example if it is 4.3578 then make it 4.36 in your answer***
- Currently, the US has a total consumption of $26,300,000, saving of $10,800,000, tax revenues of $11,500,000, and investment of $14,800,000. Calculate the size of this government's budget surplus. $___What would happen if contractionary fiscal policy were implemented during an economic boom but, due to Lag, it did not take effect until the economy slipped into recession?|An economy is in a below full-employment equilibrium. What is the effect on aggregate demand and real GDP, and the price level of fiscal stimulus that returns the economy to full employment? What is an example of fiscal stimulus that returns the economy to full employment from a below full-employment equilibrium? Fiscal stimulus that returns the economy to full employment _______ aggregate demand and real GDP, and the price level _______. A. increases; falls B. decreases; falls C. does not change; does not change D. increases; rises The fiscal stimulus that returns the economy to full employment from a below full-employment equilibrium _______. A. could be an increase in government expenditure and an equal increase in taxes B. could be a decrease in government expenditure and an equal decrease in taxes C. must be a decrease in taxes D. must be an increase in government expenditure
- 3********************* 3)List the five most powerful changes to fiscal policy that you would propose for the United States that you would like to see implemented that would reduce our debt-to-GDP ratio and put the country on a fiscally sustainable path to the future.Country D experiences a recession due to a decrease in consumer confidence. There are two economists, Andrew and Betty. Betty suggests the government to do nothing. Andrew suggests the government to implement fiscal policies to revive the economy as soon as possible. If the government adopts Betty’s policy, draw an AD-AS graph to show what happens to the economy in short run and then long run after the decrease in consumer confidence. Suppose the government adopts Andrew’s policy. (i) Will the government increase or decrease spending? (ii) The government cuts the income tax rate. After cutting the income tax rate, the total income tax revenue collected increases. Explain why. (iii) Will Andrew’s policy be more effective if MPC is smaller? Give one advantage of Betty’s policy over Andrew’s policy.10) If aggregate demand shifts left and the President and Congress want to use fiscal policy to reverse the change in output, they could increase government expenditures. If by the time policy has been implemented the economy has moved back to long-run equilibrium, then this policy will raise output above its long-run level. decrease government expenditures. If by the time policy has been implemented the economy has moved back to long-run equilibrium, then this policy will reduce output to below its long-run level. increase government expenditures. If by the time policy has been implemented the economy has moved back to long-run equilibrium, then this policy will reduce output to below its long-run level. decrease government expenditures. If by the time policy has been implemented the economy has moved back to long-run equilibrium, then this policy will raise output above its long-run level.