Homework Answers
Answer : a) Decrease in government purchase decrease then aggregate demand which shift the aggregate demand curve to leftward. As a result, the real GDP demanded decrease.
b) Increase in tax decrease the consumption level. As a result, the aggregate demand decrease which shift the aggregate demand curve to leftward. Due to decrease in aggregate demand the real GDP demanded decrease.
c) Decrease in transfer payments decrease the consumer spending. Because decrease in transfer payments reduce the amount of money for people to spend. As a result, the aggregate demand decrease which shift the aggregate demand curve to leftward. Due to decrease in aggregate demand the real GDP demanded decrease.
d) MPC (Marginal Propensity to Consume) decrease when consumption decrease. When consumption decrease then the aggregate demand decrease which shift the aggregate demand curve to leftward. As a result, the real GDP demanded decrease.
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Response Questions Part A To D Determine whether each of the following, other factors held constant,...
Response Questions Part A To D Assume the government purchases decrease by $10 billion, with other...
Response Questions Part A To D Assume the government purchases decrease by $10 billion, with other factors held constant, including the price level. Calculate the change in the level of real GDP demanded for each of the following values of the MPC. Then, calculate the change if the government, instead of reducing its purchases, increased autonomous net taxes by $10 billion. a. 0.9 b. 0.8 c. 0.75 d. 0.6
Response Questions Part A To D Determine whether each of the following would make fiscal policy...
Response Questions Part A To D Determine whether each of the following would make fiscal policy more effective or less effective: A decrease in the marginal propensity to consume а. Shorter lags in the effect of fiscal policy b. Consumers suddenly becoming more concerned about permanent income than about current income с. d More accurate measurement of the natural rate of unemployment
2. Given the information below, answer the questions that follow. a. b. c. d. What is...
2. Given the information below, answer the questions that follow. a. b. c. d. What is the equilibrium GDP? Explain why $400 is not the equilibrium. (6 pts) What is the marginal propensity to consume (MPC) in this question? (Explain) (4 pts) Draw a diagram to illustrate the cquilibrium found in part (a). (5 pts) If government purchases increased by $15 and the price level did not change, what would the new equilibrium be? (Show all work) (5 pts) c....
please show solutions also. Thanks Question 4 In a simple Keynesian model, assume that the marginal...
please show solutions also. Thanks
Question 4 In a simple Keynesian model, assume that the marginal propensity to consume (MPC) is 0.5. a) Find the government purchases multiplier b) Find the tax multiplier c) If the government wants to increase equilibrium real GDP by $ 500 billion, how much should the government increase spending? d) For the same purpose, how much should the government decrease taxes? According to Ricardian equivalence, do you think the government estimate is correct (should the...
2 2 a negative sign() in front of those numbers. . If it increases government purchases,...
2 2 a negative sign() in front of those numbers. . If it increases government purchases, real GDP will increase by $ billion suggesting an expenditures multiplier of If the government instead lowers taxes, real GDP will increase by $ billion, suggesting a tax multiplier of b. Now suppose another country's MPC is 0.8, and in this country, government seeks to reduce real GDP by either decreasing government purchases by $40 billion or by raising taxes by the same amount...
16. to the wealth effect, an increase in the price level causes ease in real wealth and more purchases b. An incr C. A decrease d. rease in real wealth and fewer purchases se in real wealth and f...
16. to the wealth effect, an increase in the price level causes ease in real wealth and more purchases b. An incr C. A decrease d. rease in real wealth and fewer purchases se in real wealth and fewer purchases A decrease in r price level increase tends to reduce net exports, thereby reducing the amount of real goods a. The b. The international banner effect C. rvices purchased in the U.S. Economists refer to this phenomenon as international wealth...
(1) Other things being equal, which of the following will increase aggregate expenditures? Group of answer...
(1) Other things being equal, which of the following will increase aggregate expenditures? Group of answer choices An increase in domestic prices relative to foreign prices A decrease in the interest rate A decrease in real wealth An increase in income taxes A decrease in government purchases of goods and services (2) If the current unemployment rate is 5 percent and the natural unemployment rate is 6 percent, then the economy is Group of answer choices producing a level of...
Use the following graph to answer the next question. Price Level AD2 AD AD Real Domestic...
Use the following graph to answer the next question. Price Level AD2 AD AD Real Domestic Output, GDP What combination would most likely cause a shift from AD, to AD2? A) An increase in taxes and an increase in government purchases A decrease in taxes and an increase in government purchases A decrease in taxes and a decrease in government purchases D) An increase in taxes and no change in government purchases
Exercise 3 Consider the following model of the economy C 170 +0.6 (Y-T) に250 G-300 T...
Exercise 3 Consider the following model of the economy C 170 +0.6 (Y-T) に250 G-300 T 200 a. What is the value of the marginal propensity to consume? b. What is the value of the government budget defidt? c. Calculate the equilibrium level of GDP d. What is the value of the government-purchases multiplier? e. Use your answer to Part d to calaulate the amount by which government purchases of goods and services would have to rise in order to...
s Question Completion Status QUESTION 3 r the marginal propensity to consume is Q.70, then if income rises by $4,000, consumption will increase by $4,000 O $3,000 O$2.800 O $1.333 QUESTION The ta...
s Question Completion Status QUESTION 3 r the marginal propensity to consume is Q.70, then if income rises by $4,000, consumption will increase by $4,000 O $3,000 O$2.800 O $1.333 QUESTION The table shows the aggregate demand and aggregate supply schedules for Japan, The Potential GPD is 600 trillion yen. e Level Real GDP Demanded I GDP Supplied Deflator) Kin trillions of 2005 yen) in trillions of 2005 yer) 75 600 550 500 400 450 500 105 115 A. What...
Response Questions Part A To D Assume the government purchases decrease by $10 billion, with other factors held constant, including the price level. Calculate the change in the level of real GDP demanded for each of the following values of the MPC. Then, calculate the change if the government, instead of reducing its purchases, increased autonomous net taxes by $10 billion. a. 0.9 b. 0.8 c. 0.75 d. 0.6
Response Questions Part A To D Determine whether each of the following would make fiscal policy more effective or less effective: A decrease in the marginal propensity to consume а. Shorter lags in the effect of fiscal policy b. Consumers suddenly becoming more concerned about permanent income than about current income с. d More accurate measurement of the natural rate of unemployment
2. Given the information below, answer the questions that follow. a. b. c. d. What is the equilibrium GDP? Explain why $400 is not the equilibrium. (6 pts) What is the marginal propensity to consume (MPC) in this question? (Explain) (4 pts) Draw a diagram to illustrate the cquilibrium found in part (a). (5 pts) If government purchases increased by $15 and the price level did not change, what would the new equilibrium be? (Show all work) (5 pts) c....
please show solutions also. Thanks
Question 4 In a simple Keynesian model, assume that the marginal propensity to consume (MPC) is 0.5. a) Find the government purchases multiplier b) Find the tax multiplier c) If the government wants to increase equilibrium real GDP by $ 500 billion, how much should the government increase spending? d) For the same purpose, how much should the government decrease taxes? According to Ricardian equivalence, do you think the government estimate is correct (should the...
2 2 a negative sign() in front of those numbers. . If it increases government purchases, real GDP will increase by $ billion suggesting an expenditures multiplier of If the government instead lowers taxes, real GDP will increase by $ billion, suggesting a tax multiplier of b. Now suppose another country's MPC is 0.8, and in this country, government seeks to reduce real GDP by either decreasing government purchases by $40 billion or by raising taxes by the same amount...
16. to the wealth effect, an increase in the price level causes ease in real wealth and more purchases b. An incr C. A decrease d. rease in real wealth and fewer purchases se in real wealth and fewer purchases A decrease in r price level increase tends to reduce net exports, thereby reducing the amount of real goods a. The b. The international banner effect C. rvices purchased in the U.S. Economists refer to this phenomenon as international wealth...
Use the following graph to answer the next question. Price Level AD2 AD AD Real Domestic Output, GDP What combination would most likely cause a shift from AD, to AD2? A) An increase in taxes and an increase in government purchases A decrease in taxes and an increase in government purchases A decrease in taxes and a decrease in government purchases D) An increase in taxes and no change in government purchases
Exercise 3 Consider the following model of the economy C 170 +0.6 (Y-T) に250 G-300 T 200 a. What is the value of the marginal propensity to consume? b. What is the value of the government budget defidt? c. Calculate the equilibrium level of GDP d. What is the value of the government-purchases multiplier? e. Use your answer to Part d to calaulate the amount by which government purchases of goods and services would have to rise in order to...
s Question Completion Status QUESTION 3 r the marginal propensity to consume is Q.70, then if income rises by $4,000, consumption will increase by $4,000 O $3,000 O$2.800 O $1.333 QUESTION The table shows the aggregate demand and aggregate supply schedules for Japan, The Potential GPD is 600 trillion yen. e Level Real GDP Demanded I GDP Supplied Deflator) Kin trillions of 2005 yen) in trillions of 2005 yer) 75 600 550 500 400 450 500 105 115 A. What...
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