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
Homework Answers
![We know that in equilibrium, Y= c + I+G - [closed Ewnomy] where, Y GDP c→ Consumption expenditure I Investment a > Gouernment](http://img.homeworklib.com/questions/95588810-3452-11eb-93a9-85d063734aa1.png?x-oss-process=image/resize,w_560)
![dy = -008 X 20 X109 1-008 16=0.8 d] =$20 billion = dy = - 0,8 x 204109 ► dy --4x20x109 = dy =-80x109 = dy = -80 billion. So,](http://img.homeworklib.com/questions/971a3850-3452-11eb-a695-97033cbac046.png?x-oss-process=image/resize,w_560)
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Assume the economy has an MPC of 0.8. An increase in taxes of
$20 billion (∆T=...
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....
Investment Problem: 1. Assume the MPC is 3/4, if investment spending increase by $50 billion, the...
Investment Problem: 1. Assume the MPC is 3/4, if investment spending increase by $50 billion, the level of GDP will: 2. Assume the MPC is 2/3, if investment spending decreases by $30 billion, the level of GDP will: Export Problem: 3. If the multiplier in an economy is 4, a $50 billion increase in exports will: 4. If the multiplier in an economy is 3,a $30 billion decrease in exports will: Balanced Budget Problem: 5. If the MPC is .75...
An economy has a fixed price level, no imports, and no income taxes. MPC is 0.50.5,...
An economy has a fixed price level, no imports, and no income taxes. MPC is 0.50.5, and real GDP is $250250 billion. Businesses increase investment by $55 billion. Calculate the multiplier and the change in real GDP. The multiplier is nothing. The increase in real GDP is $nothing billion.
When the MPC is .75, a decrease in net taxes of $100 billion will increase the...
When the MPC is .75, a decrease in net taxes of $100 billion will increase the equilibrium level of real GDP by a. $75 billion b. $100 billion c. $300 billion d. $400 billion Please explain and provide a formula for questions like this if applicable.
Assume the government cuts taxes by $200 billion. If the MPC is 0.8, what is the maximum potential impact on real GDP according to the simple Keynesian model?
Assume the government cuts taxes by $200 billion. If the MPC is 0.8, what is the maximum potential impact on real GDP according to the simple Keynesian model? Real GDP increases by $1,000 billion Real GDP Increases by $800 billion Real GDP decreases by 51.000 billion Real GDP decreases by 5000 buttonIn Keynesian theory, if the marginal propensity to consume is 0.90 and government spending is increased by $50 billion, then real income (GDP) will maximum of billion by a decrease: $500 decrease $50 Increase: $500 Increase: $50
7 . Study Questions and Problems #5 Suppose the value of the MPC in an economy...
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...
Assume that a hypothetical economy with an MPC of 0.8 is experiencing severe recession. Instructions: In...
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 0.8 is experiencing severe recession. a. By...
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...
The MPC for the economy is 0.6. If the government were to reduce taxes on household...
The MPC for the economy is 0.6. If the government were to reduce taxes on household income by 60 billion, consumption spending would and equilibrium GDP would Increase by 36, increase by 90. O Increase by 36, increase by 150. Decrease by 36, decrease by 90. Decrease by 36, increase by 90. Decrease by 36, decrease by 150.
Question 14 6 pts Assume the government cuts taxes by $250 billion. If the MPC is...
Question 14 6 pts Assume the government cuts taxes by $250 billion. If the MPC is 0.8, what is the maximum potential impact on real GDP according to the simple Keynesian model? Real GDP decreases by $1,000 billion Real GDP decreases by $1.250 billion Real GDP increases by $1,000 billion Real GDP increases by $1.250 billion D Question 15 6 pts in Keynesian theory, if the marginal propensity to consume is 0.90 and government spending is increased by $40 billion,...
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....
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...
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...
The MPC for the economy is 0.6. If the government were to reduce taxes on household income by 60 billion, consumption spending would and equilibrium GDP would Increase by 36, increase by 90. O Increase by 36, increase by 150. Decrease by 36, decrease by 90. Decrease by 36, increase by 90. Decrease by 36, decrease by 150.
Question 14 6 pts Assume the government cuts taxes by $250 billion. If the MPC is 0.8, what is the maximum potential impact on real GDP according to the simple Keynesian model? Real GDP decreases by $1,000 billion Real GDP decreases by $1.250 billion Real GDP increases by $1,000 billion Real GDP increases by $1.250 billion D Question 15 6 pts in Keynesian theory, if the marginal propensity to consume is 0.90 and government spending is increased by $40 billion,...
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