Answer - Multiplier = 1/(1-0.58)
= 1/0.42
= 2.38
Multiplier = Change in GDP / Change in investment (here government exp)
2.38 = 457 / change in govn. Exp.
Change in exp. = 457/2.38
= $192.01
Thus the government need to increase its expenditure by $ 192.01
Suppose that in an economy with a MPC of 0.58 the government wanted to shift the...
If the MPC in an economy is 0.79, government could shift the aggregate demand curve rightward by $439 at each price level by decreasing taxes by: (round to the nearest second decimal) Your Answer:
if the MPC is an economy is .8, government could shift the aggregate demand curve rightward by $100 billion by:
Assume that a hypothetical economy with an MPC of 0.8 is
experiencing severe recession.
Instructions: In part a, round your answers to 2 decimal
places. Enter your answers as positive numbers. In part b, enter
your answers as whole numbers.
a. By how much would government spending have to rise to shift
the aggregate demand curve rightward by $50 billion?
___billion
How large a tax cut would be needed to achieve the same
increase in aggregate demand?
___billion
b. Determine...
Assume that a hypothetical economy with an MPC of 0.8 is experiencing severe recession. a. By how much would government spending have to rise to shift the aggregate demand curve rightward by $25 billion? billion How large a tax cut would be needed to achieve the same increase in aggregate demand? Instructions: Round your answer to 2 decimal places and enter your answer as a positive number. Tax cut - ARRASANTA billion. b. Determine one possible combination of government spending...
Assume that a hypothetical economy with an MPC of 0.8 is experiencing severe recession. Instructions: In part a, round your answers to 2 decimal places. Enter positive numbers. In part b, enter your answers as whole numbers. a. By how much would government spending have to rise to shift the aggregate demand curve rightward by $50 billion? $________ billion. How large a tax cut would be needed to achieve the same increase in aggregate demand? $________ billion. b. Determine one...
Assume that a hypothetical economy with an MPC of.8is experiencing severe recession. a) By how much would government spending have to increase to shift the aggregate demand curve rightward by $50 billion (nominal terms)? Ans: Show work: b) How large a tax cut would be needed to achieve this same increase in aggregate demand (nominal terms)? Ans: Show work: c) Why the difference in a) and b) above? (One sentence)
1.)Suppose, the government is concerned about breaches in
government data security and has decided to spend
$1billion
dollars on improving data security. Government will not cut
spending in other areas of the budget, so it will likely have to
issue new government bonds to finance this increase in government
spending. Use the graph below to show the impact of the
aforementioned on the economy by shifting the appropriate
curve(s).
2.)
Suppose the US government has decided to expand its budget...
Multiple Choice: 1) Assume the MPC is 0.75 and lump sum taxes are collected by the government. What is the government tax multiplier? A)-1.33 B) - 25 C) - 75 D) -4 E) -3 , which the recessionary gap. 2) During a Recession, the MPC tends to a) Increase, increases b) Decrease, decreases c Decrease, increases d) Increase, decreases 3) Suppose that the MPC is.75 and the US Federal Government reduces taxes by 10 million dollars. After 3 rounds of...
7 . Study Questions and Problems #5 Suppose the value of the MPC in an economy is 0.5 The value of the MPS in this economy is and the value of the spending multiplier in this economy is Now, suppose the value of the MPC in an economy is 0.8 The value of the MPS in this economy is , and the value of the spending multiplier in this economy is If the value of the MPC increases, the spending...
Inflationary pressure in the AS-AD model can be shown as a leftward shift of the AD curve when the economy is already producing at its potential GDP. supply shock that shifts the AS to the right. rightward shift of the AD curve when the economy is already producing at its potential GDP. Typically, if consumer and business confidence is high then ________ and if consumer and business confidence is low then ________. AD shifts to the left; AD shifts to...