Homework Answers
The incorrect statement is
c) in order to reduce the budget deficit by $1billion, we need to cut the government spending by$1 billion.
This decision will have repercussions on the market wherein budget deficit won't really be eliminated.
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2. Explain why the following statements are incorrect: a) It would seem that the goods market...
2. Explain why the following statements are incorrect: a) It would seem that the goods market...
2. Explain why the following statements are incorrect: a) It would seem that the goods market model predicts that a drop in output inevitably leads to a drop in demand and spending which leads to even lower output. In this way, the economy could collapse completely. b) If only people were willing to save more, investment would increase and the economy would get moving again. In order to reduce the budget deficit by $1 billion, we just need to cut...
14. (2 pt) Explain the effect of a discretionary cut in taxes of $40 billion on...
14. (2 pt) Explain the effect of a discretionary cut in taxes of $40 billion on the economy when the economy's MPC is .75. How does this discretionary fiscal policy differ from a discretionary increase in government spending of $40 billion? A tax cut of $40 billion will result in initial increase in consumption of S billion). (Note that $10Bil. is saved based on marginal propensity to save (MPS), that is 25 (because 1-MPC-MPS). Then .25 x $40-$10 billion). This...
Question 6 (2 points) If equilibrium output and income (Y) is 1,000 less than potential output...
Question 6 (2 points) If equilibrium output and income (Y) is 1,000 less than potential output at full employment (Y), and the marginal propensity to consume is 0.8, how much additional autonomous spending is needed to reach full employment (that is, what is the recessionary gap)? If the government decreased total taxes out of income (T), how much would the tax cut have to be to bring the economy to full employment? Question 72 points) Circle the correct set of...
Z. Given the following data representing the goods market in an open economy Marginal propensity to...
Z. Given the following data representing the goods market in an open economy Marginal propensity to consume 0.5 300 Direct tax rate Autonomous Taxation Transfers 0.1 100 200 10000 Gov spending 2000 0.2 50 6000 investment Marrinal propensity to import Autonomous imports Exports Using the Keynesian cross-model, compute a) The equilibrium level of the aggregate output The value of public savings corresponding to the equilibrium level of the output; say if the country is running a budget deficit or surplus...
1. Explain why we can measure the GDP or output of a country by adding up...
1. Explain why we can measure the GDP or output of a country by adding up either the market value of production in that country or by adding up the income earned by people in that country. (Helpful hint: Remember when I used the example in class about two shoemakers, one who can produce 4 pairs of shoes per day and another who can produce 5 pairs per day. All the pairs of shoes are identical in quality.) 2. What...
2. Given the following data representing the goods market in an open economy Marginal propensity to...
2. Given the following data representing the goods market in an open economy Marginal propensity to consume Autonomous consumption Direct tax rate Autonomous Taxation Transfers Gov spending 0.5 300 0.1 100 200 Investment Mareinal propensity to import Autonomous imports Exports 10000 2000 0.2 50 6000 uning the Keymnesan cross model compute a) The equilibrium level of the aggregate output b) The value of public savings corresponding to the equilbrium level of the output; say if the country is running a...
QUESTION 1 Which of the following is an example of an automatic fiscal policy stabilizer? a....
QUESTION 1 Which of the following is an example of an automatic fiscal policy stabilizer? a. Tax revenues fall as real GDP decreases. b. Congress decides to cut spending on national defense. c. Congress cuts individual income tax rates. d. Tax revenues rise after Congress raises corporate tax rates. QUESTION 7 When a country's economy is producing at a level that is less than its potential GDP, the standardized employment deficit will show a ________ than the actual deficit. a....
Which of the following statements would be inconsistent with Say's law?
Which of the following statements would be inconsistent with Say's law? A given value of supply must create an equivalent value of demand in the economy The economy has flexible prices and wages. The best way to foster an economy is through government stimulus spendingThe country of Botalava hired Gustav to assist with government policies regarding the macroeconomy. Gustav is a neoclassical economist and makes all decisions based on that economic philosophy. What policies will Gustavo tell the government to enact in order...
could abyone help me answering these questions please! Incorrect Question 3 0/1.5 pts The aggregate demand...
could
abyone help me answering these questions please!
Incorrect Question 3 0/1.5 pts The aggregate demand of an open economy is given by the after-tax domestic consumption C, the investment (which depends on the interest rater), the government spending G and net exports X - M: AD = C+I+G+X-M=co + c (1 – t) T+I(r) + G + X - my Co is autonomous consumption, c, is the marginal propensity to consume, and m is the marginal propensity to import....
Consider an economy in which taxes, planned investment, government spending on goods and services, and net...
Consider an economy in which taxes, planned investment, government spending on goods and services, and net exports are autonomous, but consumption and planned investment change as the interest rate changes. You are given the following information concerning autonomous consumption, the marginal propensity to consume, planned investment, government purchases of goods and services, and net exports: Ca = 1,500 – 10r; c = 0.6; Ta = 1,800; Ip = 2,400 – 50r; G = 2,000; NX = -200 (a)Derive Ep and...
2. Explain why the following statements are incorrect: a) It would seem that the goods market model predicts that a drop in output inevitably leads to a drop in demand and spending which leads to even lower output. In this way, the economy could collapse completely. b) If only people were willing to save more, investment would increase and the economy would get moving again. In order to reduce the budget deficit by $1 billion, we just need to cut...
14. (2 pt) Explain the effect of a discretionary cut in taxes of $40 billion on the economy when the economy's MPC is .75. How does this discretionary fiscal policy differ from a discretionary increase in government spending of $40 billion? A tax cut of $40 billion will result in initial increase in consumption of S billion). (Note that $10Bil. is saved based on marginal propensity to save (MPS), that is 25 (because 1-MPC-MPS). Then .25 x $40-$10 billion). This...
Question 6 (2 points) If equilibrium output and income (Y) is 1,000 less than potential output at full employment (Y), and the marginal propensity to consume is 0.8, how much additional autonomous spending is needed to reach full employment (that is, what is the recessionary gap)? If the government decreased total taxes out of income (T), how much would the tax cut have to be to bring the economy to full employment? Question 72 points) Circle the correct set of...
Z. Given the following data representing the goods market in an open economy Marginal propensity to consume 0.5 300 Direct tax rate Autonomous Taxation Transfers 0.1 100 200 10000 Gov spending 2000 0.2 50 6000 investment Marrinal propensity to import Autonomous imports Exports Using the Keynesian cross-model, compute a) The equilibrium level of the aggregate output The value of public savings corresponding to the equilibrium level of the output; say if the country is running a budget deficit or surplus...
1. Explain why we can measure the GDP or output of a country by adding up either the market value of production in that country or by adding up the income earned by people in that country. (Helpful hint: Remember when I used the example in class about two shoemakers, one who can produce 4 pairs of shoes per day and another who can produce 5 pairs per day. All the pairs of shoes are identical in quality.) 2. What...
2. Given the following data representing the goods market in an open economy Marginal propensity to consume Autonomous consumption Direct tax rate Autonomous Taxation Transfers Gov spending 0.5 300 0.1 100 200 Investment Mareinal propensity to import Autonomous imports Exports 10000 2000 0.2 50 6000 uning the Keymnesan cross model compute a) The equilibrium level of the aggregate output b) The value of public savings corresponding to the equilbrium level of the output; say if the country is running a...
Which of the following statements would be inconsistent with Say's law? A given value of supply must create an equivalent value of demand in the economy The economy has flexible prices and wages. The best way to foster an economy is through government stimulus spendingThe country of Botalava hired Gustav to assist with government policies regarding the macroeconomy. Gustav is a neoclassical economist and makes all decisions based on that economic philosophy. What policies will Gustavo tell the government to enact in order...
could
abyone help me answering these questions please!
Incorrect Question 3 0/1.5 pts The aggregate demand of an open economy is given by the after-tax domestic consumption C, the investment (which depends on the interest rater), the government spending G and net exports X - M: AD = C+I+G+X-M=co + c (1 – t) T+I(r) + G + X - my Co is autonomous consumption, c, is the marginal propensity to consume, and m is the marginal propensity to import....
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