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.
Homework Answers
Answer
tax Multiplier =-MPC/(1-MPC)
=-0.75/(1-0.75)
=-3
change in GDP=change in taxes * tax multiplier
=-100*(-3) ............. -100 denotes the decrease as the minus sign shows a decrease
=$300 billion
the GDP increases by $300 billion
option c
Add Answer to:
When the MPC is .75, a decrease in net taxes of $100 billion
will increase the...
decrease in personal taxes from $100 billion to 580 billion will increase real GDP 11. If...
decrease in personal taxes from $100 billion to 580 billion will increase real GDP 11. If the MPC -0.75, a decrease in person by A) $20 billion. B) $40 billion. C) $60 billion. D) $80 billion. Table 10.1 Consumption C - $1.0+ 0.80YD Investment $1.5 Government purchases $2.2 Net exports Taxes Government transfer payments $0 (all values are in billions of dollars) 2, 12. Refer to Table 10.1. Equilibrium real GDP for this economy is equal to A) $5.75 billion....
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...
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,...
If the MPC is .75 and the federal government decreases taxes by $200 billion, how much...
If the MPC is .75 and the federal government decreases taxes by $200 billion, how much will real GDP be expected to increase?
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....
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
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...
If the MPC is 0.6 and taxes are cut by $2000, real GDP will: A. increase...
If the MPC is 0.6 and taxes are cut by $2000, real GDP will: A. increase by $1,500 B. increase by $3,000 C. increase by $750 D. decrease by $750
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
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
decrease in personal taxes from $100 billion to 580 billion will increase real GDP 11. If the MPC -0.75, a decrease in person by A) $20 billion. B) $40 billion. C) $60 billion. D) $80 billion. Table 10.1 Consumption C - $1.0+ 0.80YD Investment $1.5 Government purchases $2.2 Net exports Taxes Government transfer payments $0 (all values are in billions of dollars) 2, 12. Refer to Table 10.1. Equilibrium real GDP for this economy is equal to A) $5.75 billion....
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...
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....
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
Most questions answered within 3 hours.
-
In 1970s and 1980s, molecular biologists discovered that the
hormone testosterone, binds a receptor protein that...
asked 5 minutes ago -
january 1 2010 road catering service purchase a piece of
equipment for 58000 which is expected...
asked 26 minutes ago -
Explain Mertons concept of anomie is and what the
modes of adaptation to it are?
asked 1 hour ago -
Jamie is doing a survey at her school about whether the students
feel the cafeteria food...
asked 2 hours ago -
How many liters of 0.669 M KOH will be needed to raise the pH of
0.339...
asked 5 hours ago -
A liquid of density 1270 kg/m 3 flows steadily through a pipe of
varying diameter and...
asked 5 hours ago -
Questions: What should the American executive do?
'A visiting American executive finds that a foreign subsidiary...
asked 5 hours ago -
Activity based costing was introduced as an alternative to
absorption costing.
1. Discuss using illustration the...
asked 5 hours ago -
1. You own shares of Crane DVD Company and are interested in
selling them. With so...
asked 5 hours ago -
How many grams of He are necessary to fill a balloon having a
volume of 4.5E3...
asked 5 hours ago -
The 2 patients, still in the hospital, were interviewed by a
MoH epidemiologist. The interviews revealed...
asked 5 hours ago -
An uncharged capacitor and a resistor are connected in series to
a source of emf. If...
asked 5 hours ago