The economy of HOYA has a spending mulipilier of 4. Based only on this information, we know that in HOYA O. Every one point change in R will change spending by 4 O. An $80 decrease in investment will reduce GDP by $20 O. A $10 increase in not exports will lead to a $40 income equilibrium GDP O. $25 increase in goverment purchase will increase equilibrium consumption by $100

The economy of HOYA has a spending mulipilier of 4. Based only on this information, we know that in HOYA O. Every one point change in R will change spending by 4 O. An $80 decrease in investment will reduce GDP by $20 O. A $10 increase in not exports will lead to a $40 income equilibrium GDP O. $25 increase in goverment purchase will increase equilibrium consumption by $100

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section11.A: Graphical Treatment Of Taxes And Fiscal Policy

Problem 2TY

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Consider an economy similar to that in the preceding question in which investment is also $200, government purchases are also $500, net exports are also $30, and the price level is also fixed. But taxes now vary with income and, as a result, the consumption schedule looks like the following: GDP Taxes DI C $1,360 $320 $1,040 $810 1,480 360 1,120 870 1,600 400 1,200 930 1,720 440 1,280 990 1,840 480 1,360 1,050 Find the equilibrium graphically. What is the marginal propensity to consume? What is the tax rate? Use your diagram to show the effect of a decrease of $60 in government purchases. What is the multiplier? Compare this answer to your answer to Test Yourself Question 1. What do you conclude? GDP…
Government Purchases (G) and Tax Revenues (T) HJK L GDP T G Refer to the diagram. The degree of built-in stability in the economy could be increased by altering the government expenditures line so that it has a positive slope. reducing government purchases so that the purchases line shifts downward but parallel to its present position. O changing the tax system so that the tax line has a greater slope. O changing the tax system so that the tax line is shifted downward but parallel to its present position.
Multiplier Effect a. During a recessionary gap, is the goal to increase or decrease the equilibrium GDP? Will the change in spending be greater than, less than or equal to the change in the equilibrium GDP? b. c. In a given economy with an MPC of 0.8, the equilibrium GDP equals $630,000. If G increases by $70000, solve for the new equilibrium GDP that will result. In a given economy, with an equilibrium GDP of $280,000 both government purchases and taxes increase by $10,000. Solve for the new equilibrium GDP that will result from these two changes.
if investment is $0.5 trillion, government spending is $1 trillion, and next exports are -$0.5 trillion, the equilibrium GDP is:
Given an economy is currently producing at $1.47 GDP, natural rGDP is $1.67, and the MPC is 0.94, then the multiplier for increases in aggregate expenditures is: A (round to ane decimal point). This means the federal government should increase its expenditures by A (whole number) billion dollars.
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In the economy of Kwartengland, the following figures are given for economic activity which was undertaken in 2013. All the figures are million Ghana Cedis Consumption Expenditure = 1000 + 0.8 YD Investment Spending= 600 Government Expenditure = 2450 Personal Taxes= 100 Exports= 100 Imports= 150 1. Calculate the equilibrium real GDP for the economy 2. What is the level of consumption at the equilibrium level of GDP 3. Calculate the investment and tax multipliers 4. By how much should exports change if government wishes to increase real GDP by 1000?
"In a private closed economy, when aggregate expenditures exceed National Income" O National Income will decline. O Saving will decline. Business inventories will rise. Business inventories will fall. A Moving to another question will save this response. ch DELL
O Macmillan Learning The graph shows the income-expenditure model for the country of Desireland, where AE represents aggregate expenditure. The Desirish government wants to stimulate the economy owing to a slowdown in economic activity and, as such, decides to increase infrastructure spending by $7.65 billion. Show the impact of this extra spending given a marginal propensity to consume (MPC) of 0.7 and a total tax take of 30%, for any changes in GDP. In this example, assume that there is no international trade or inflation, and that interest rates are fixed. Planned aggregate spending (in billions of dollars) 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0 0 01- 5 10 15 20 25 30 35 40 45 50 Real GDP (in billions of dollars) 45 degree line A new socialist government is elected to Desireland and decides to increase direct spending even more, to total of $9.7 billion. What will be the total change in real GDP? Please provide the answer to the nearest whole billion. Planned AE 55 60 65 70…
13. а The accompanying table shows gross domestic product (GDP), disposable income (YD), con- sumer spending (C), and planned investment spending (Iplanned) in an economy. Assume there is no government or foreign sector in this economy. Complete the table by calculating planned aggre- gate spending (AEplanned) and unplanned inven- tory investment (IUnplanned). GDP YD C IPlanned AEPlanned Unplanned (billions of dollars) $0 $0 $100 $300 400 400 400 300 800 800 700 300 1,200 1,200 1,000 300 300 1,600 1,600 1,300 300 ? 2,000 2,000 1,600 300 2,400 2,400 1,900 300 2,800 2,800 2,200 300 3,200 3,200 2,500 b. What is the aggregate consumption function? c. What is Y*, income-expenditure equilibrium GDP?
K The following equations describe consumption, investment, government spending, taxes, and net exports in the country of Economika. In Economika, equilibrium GDP is equal to $. (Round your asnwer the nearest dollar.) If real GDP in Economika is currently $4,850, which of the following is true? A. There will be an unplanned decrease in inventories, and real GDP will increase next period. OB. There will be an unplanned increase in inventories, and real GDP will increase next period. OC. There will be an unplanned decrease in inventories, and real GDP will decrease next period. O D. There will be an unplanned increase in inventories, and real GDP will decrease next period. OE. There will be no unplanned change in inventories, and real GDP will stay the same next period. C=200+0.80(Y-T) 1=400 G=350 T=350 X = 100
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