Homework Answers
Add Answer to:
21. If an economy in recession with a GDP gap of $10 billion has an MPC...
1) Suppose that the national economy is experiencing a recession with an estimated recessionary gap of...
1) Suppose that the national economy is experiencing a recession with an estimated recessionary gap of $10 billion. Congress is considering the use of fiscal policy to ease the recession, and due to current political sentiments, it has determined that the maximum spending increase the government is willing to support is $3 billion. The government wants to make up the remainder of the recessionary gap using tax cuts. If a spending increase of $3 billion is approved and the MPC...
Assume that equilibrium real GDP is $800 billion. Potential real GDP is 950 billion, the MPC...
Assume that equilibrium real GDP is $800 billion. Potential real GDP is 950 billion, the MPC IS .80, and the MPI is .40 If government spending and taxes both change by the same amount, how much must they change to eliminate the recessionary gap?
An economy has no imports and no taxes, the MPC is 0.8, and real GDP is...
An economy has no imports and no taxes, the MPC is 0.8, and real GDP is $250 billion. Businesses decrease investment by $5 billion. Calculate the new level of real GDP. Explain why real GDP decreases by more than $5 billion. The new level of real GDP is $ billion. Real GDP decreases by more than $5 billion because the decrease in investment_ 0 A. induces an increase in saving O B. decreases the marginal propensity to consume O C....
QUESTION 21 Suppose investment spending initially increases by $50 billion in an economy whose MPC is...
QUESTION 21 Suppose investment spending initially increases by $50 billion in an economy whose MPC is 2/3. By how much will this ultimately change real GDP? O A $75 billion OB. $50 billion OC $ 150 billion D. $ 200 billion QUESTION 22 Which of the following statements is FALSE? O A When income increases MPS is constant When income increases APS Increases C. When income increases MPC is increases D. When income increases APC decreases QUESTION 23 If the...
Fiscal Policy Assume the economy is in a recession. The recessionary output gap has been identified...
Fiscal Policy Assume the economy is in a recession. The recessionary output gap has been identified as $500 billion dollars. The Federal Government wants to act to combat the recession. 1. (4 points) Past data suggests that a $10 million change in spending caused a $200 million change in total output. Use this information to calculate the Government Spending Multiplier. In one sentence, give a definition of the multiplier. 2. (6 points) Using your answer in part (1) calculate the...
Assume that equilibrium real GDP is $ 800 billion, potential real GDP is $ 950 billion,...
Assume that equilibrium real GDP is $ 800 billion, potential real GDP is $ 950 billion, the MPC is .80, and the MPI is .40. a. How much taxes fall to eliminate the GDP gap? b.If government spending and taxes both change by the same amount, how much must they change to eliminate the recessionary gap?
Assume the economy has an MPC of 0.8. An increase in taxes of $20 billion (∆T=...
Assume the economy has an MPC of 0.8. An increase in taxes of $20 billion (∆T= 20) would lower the equilibrium level of GDP (- ∆Y=?) by
Two economies A and B are in recession. Economy A has MPC = 0.80 and economy...
Two economies A and B are in recession. Economy A has MPC = 0.80 and economy B has MPC = 0.60. Governments of both countries want to implement a fiscal policy of increased government spending for their economies to recover. In which economy increased government spending has the greatest impact on the GDP? Please help and thank you for your time
3. You are given the following information about the economy: autonomous consumption = $300 billion ...
3. You are given the following information about the economy: autonomous consumption = $300 billion planned investment = $300 billion government spending = $500 billion mpc = .8 imports = $200 billion exports = $500 billion a. Using the values above, what is the equation for the consumption function? b. Using the values above, what is the income/spending multiplier? c. What is the value of Net Exports? d. Is there a trade surplus or deficit? Of how much?...
The graph below depicts an economy where a decline in aggregate demand has caused a recession....
The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the government decides to conduct fiscal policy by increasing government purchases to reduce the burden of this recession. Fiscal Policy LRAS Price Level 100 200 300 400 500 600 700 800 900 Real GDP (billions of dollars) Instructions: Enter your answers as a whole number. a. How much does aggregate demand need to increase to restore the economy to its long-run equilibrium? O...
An economy has no imports and no taxes, the MPC is 0.8, and real GDP is $250 billion. Businesses decrease investment by $5 billion. Calculate the new level of real GDP. Explain why real GDP decreases by more than $5 billion. The new level of real GDP is $ billion. Real GDP decreases by more than $5 billion because the decrease in investment_ 0 A. induces an increase in saving O B. decreases the marginal propensity to consume O C....
QUESTION 21 Suppose investment spending initially increases by $50 billion in an economy whose MPC is 2/3. By how much will this ultimately change real GDP? O A $75 billion OB. $50 billion OC $ 150 billion D. $ 200 billion QUESTION 22 Which of the following statements is FALSE? O A When income increases MPS is constant When income increases APS Increases C. When income increases MPC is increases D. When income increases APC decreases QUESTION 23 If the...
Fiscal Policy Assume the economy is in a recession. The recessionary output gap has been identified as $500 billion dollars. The Federal Government wants to act to combat the recession. 1. (4 points) Past data suggests that a $10 million change in spending caused a $200 million change in total output. Use this information to calculate the Government Spending Multiplier. In one sentence, give a definition of the multiplier. 2. (6 points) Using your answer in part (1) calculate the...
The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the government decides to conduct fiscal policy by increasing government purchases to reduce the burden of this recession. Fiscal Policy LRAS Price Level 100 200 300 400 500 600 700 800 900 Real GDP (billions of dollars) Instructions: Enter your answers as a whole number. a. How much does aggregate demand need to increase to restore the economy to its long-run equilibrium? O...
Most questions answered within 3 hours.
-
A rod made of cobalt with a mass of 0.80 kg is heated to 850°C,
then...
asked 21 seconds from now -
Suppose the price elasticity of demand for movies is -1.5. If
the price of movies increase...
asked 13 seconds ago -
Two resistors, of 3.2 Ω and 5.8 Ω, are connected in parallel to
the terminals of...
asked 2 minutes from now -
Regardless of the system used in departmental cost analysis:
Multiple Choice
Neither direct nor indirect costs...
asked 3 minutes ago -
The peak voltage of the source from problem 4 is 12 V. You
notice that the...
asked 13 minutes ago -
scientist have determined that some people are born with a very
small hole in their heart....
asked 16 minutes ago -
Calculate [H3O+] in the following aqueous solution at 25 ∘C:
[OH−]= 1.0×10−9 M .
Calculate [H3O+]...
asked 20 minutes ago -
The total vapor pressure above a binary solution of components A
and B is found to...
asked 19 minutes ago -
Intensity level is given by b = 10 log(I/I0) with I0 = 10−12
W/m2. The usual...
asked 28 minutes ago -
For each of the following product pairs, what would you guess
about their cross price elasticity...
asked 31 minutes ago -
GreyCo collected $17,200 of customer deposits on cans and
bottles. As of the end of the...
asked 34 minutes ago -
Please, I am evaluating an error term y = 5^(n+1)*(n+1)
and wish to find the number...
asked 43 minutes ago