Use the following equations for exercises 16–18. C = $100 + .8Y I = $200 G = $250 X = $100 – .2Y 16. What is the equilibrium level of real GDP? 17. What is the new equilibrium level of real GDP if government spending increases by S150? 18. What is the new equilibrium level of real GDP if government spending and taxes both increase by $150?
Q: Assume that equilibrium real GDP is $ 800 billion, potential real GDP is $ 950 billion, the MPC is…
A: “Hey, since there are multiple subpart questions posted, we will answer first three subpart. If you…
Q: use the following equation. C = 50 + 0.6(Y – T) 9) What is autonomous consumption in this economy?…
A: Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: Given the following model for an economy C = 100 + 0.8Yd G = 800 T = 500 I = 200 a)…
A: As per the guidelines, we only answer the first three sub-parts at a time. Please resubmit the other…
Q: Suppose that autonomous consumption (a) is 300, private investment spending (I) is 420, government…
A: It is given that, a=300 I=420 G=400 T=400 MPC(b)=0.8 t=0.25Y
Q: You are given data on the following variables in an economy: Item Value Government spending…
A: G = 300 I = 200 NX = 50 Autonomous taxes = 250 t = 0.1 MPC = 0.5 C = 600 when Y = 1500 Now, solving…
Q: Q.1 DISTINGUISH BETWEEN INCOME AND DISPOSABLE INCOME Q.2 HOW DO TAXES AFFECT THE LEVEL OF AGGREGATE…
A: A person who works for a living is known to earn an amount of money that is known as income. This…
Q: 6. Graphically illustrate the effect of an increase in government purchases. Explain the government…
A: The aggregate demand is the summation of all the individual demands in the economy from all the…
Q: Suppose that real GDP for an economy is currently 16,000 billion, the government purchases…
A: Fiscal policy refers to the actions taken by the government to intefere in the economic activity and…
Q: Consider a simple model where consumption is C = c(Y-T), Y-T is disposable income, c is the marginal…
A: Fiscal multiplier (FM): It is the ratio of change in total output to change in taxes FM=∂Y∂T This…
Q: 4. In the New-Keynesian model where government expenditure is financed through taxation only, if…
A: When government raises its expenditure by 100 in order to increase output, it leads to a rise in the…
Q: Suppose the government raises its revenue by a net tax of 25 percent on income, t = 0.25, the…
A: The public debt ratio shows how much a nation owes in the form of debts and indicates the capability…
Q: Q#1) Consider the following equations describing the components of demand and equilibrium in the…
A: Equilibrium output is takes place where AE is equals to the Y where AE = C+I+G And the different…
Q: The following graph shows the planned expenditure line (AE) for an economy where current equilibrium…
A: Equilibrium income = $400 Full employment income = $650
Q: 2. Use the following equations for exercises to answer the following questions. C = $100 + 0.8Y I=…
A: Given information are as follows. (a) The equilibrium level of real GDP can be calculated as…
Q: Suppose that autonomous consumption (a) is 300, private investment spending (I) is 420, government…
A: ‘Real GDP’ is a macroeconomic metric that measures the value of an economy's goods and services over…
Q: c. If the government spending multiplier is 5, what is the tax multiplier? d. If the tax multiplier…
A: Government Spending Multiplier is 5 Government Spending multiplier =1 (1-MPC)=5 Therefore, MPC = 45…
Q: Consider the following behavioral equations: C=c, +c,Y, T=1, +1,Y Y, = Y –T G and I are both…
A: Answer: Given, C=c0+c1YDT=t0+t1YYD=Y-T (a). Equilibrium condition is given below: Y=C+I+G+X-MNote:…
Q: 2. Fiscal policy Suppose a hypothetical economy is currently in a situation of deficient aggregate…
A: Given: Deficient aggregate demand=64 billion Economist A: Government spending multiplier=8, Tax…
Q: on basis of the following information. Assume that equilibrium real GDP is $800 billion, potential…
A: Since equilibrium GDP < potential GDP, there is a recessionary gap of (950 - 850) = $150 billion.…
Q: Refer to the above graph. Assume that the economy is in a recession with a price level of P2 and…
A: the aggregate demand is the total number of goods and services svgjslly form crowd out.
Q: 10. Crowding out effect Suppose economists observe that an increase in government spending of $9…
A: Marginal propensity to consume refers to change in consumption divided by change in income.
Q: Use the following information to answer questions 1, 2, and 3. Suppose that the government of…
A: The aggregate demand would result in the fact that the it would be the sum of the aggregate…
Q: modeled as follows: AE = C + I + G C = 300 + .6Yd I = 400 G = 100 T = 200 Y=1700…
A: Gross domestic product is the total value of all the goods and services produced in a country during…
Q: Fiscal policy creates a multiplier effect because O The government always runs a deficit Government…
A: Fiscal policy: - it is a tool of the government of a country in which the government adjusts its…
Q: Suppose autonomous government spending increases by $100 billion and the value of the MPC is 0.6.…
A: Formula: Multiplier = 1/(1-MPC) Calculate multiplier as follows: Multiplier = 1/(1-MPC) =…
Q: Some politicians have suggested that Conada enact a constitutional amendment requiring the federal…
A: A government budget is a paper prepared by the government and/or other political body that presents…
Q: Write and apply the concept of multiplier with the help of suitable example and diagram. How does…
A: Fiscal policy: It refers to the policy which is used by the government to correct the various…
Q: Suppose that autonomous consumption (a) is 300, private investment spending(I) is 420, government…
A: We know, from the basic macroeconomic identity, that Y = C(Y - T) + I + G Here, we have I = 420, T…
Q: What happens to the real GDP if the government increases spending by $50 million and the government…
A: The government multiplier = 1.5 Government spending = $50 million
Q: Suppose that autonomous consumption (a) is 300, private investment spending (I) is 420, government…
A: Note, Since you have posted a question with multiple sub parts, we will answer the first Sub part,…
Q: QUESTION 35 1 Q: 1- mpc + mpc t (Ca +I+G+X„) %3D 1 AQ 1- mpc + mpc ·t (ACa + AI + AG + AXn) |= 100,…
A: We have given following information I = 100, G = 200, Ca = 100, Xn = -100 MPC = 4/5 = 0.8 and…
Q: 14. If MPC is 0.6 and government spending increases by 350, how much does gross domestic product…
A: The marginal propensity to consume (MPC) is described as the percentage of an increase in pay that a…
Q: Graphically illustrate the effect of an increase in government purchases. Explain the government…
A: The government purchases are the expenses that are done on the goods and services by all the…
Q: Given C=500 + 0.80Y, I = 100, G=100, and the government decides to finance G by also increasing…
A: C=500 + 0.80Y I=100 G=100 T=100 tY=0.25Y
Q: Suppose that the government of Ansonia is experiencing a large budget deficit with fixed government…
A: Note- Since you have posted a question with multiple subparts, we will solve the first three…
Q: The following exercises are based on the Appendix to this chapter. Answer exercises 11-14 on the…
A: (Since you have posted multiple sub-parts, we will answer the first three for you. If you want a…
Q: You are given the following data C=130+0.5 (1-t) Y (Consumption) T = tY (Tax revenue) (Investment)…
A: Given Information Consumption (C) = 130 + 0.5 (1-t)YTax Revenue (T) = tYInvestment (I) = 120Tax Rate…
Q: Suppose the economy reaches equilibrium GDP at $1,250,000 while potential GDP is at $1,500,000.…
A:
Q: Consumption function: C = 250 + 0.8Y Investment spending: I = 150 Government spending: G = 500…
A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: Fiscal Policy) Chapter 11 shows that increased government purchases, with taxes held constant, can…
A: When a country's actual GDP is lower than its GDP at full employment, this is known as a recession…
Q: C = 600 + 0.8Yd , Yd = Y – T, Tg = 100, I= 200, R = 50, G = 350, X = 250 and M = 200 + 0.1Y. How…
A: Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-parts at a…
Q: For questions #9, 10, 11, and 12 use the following equation. C = 20 + 0.2(Y – T) 9) What is the…
A: Disposable income is the income available to the consumers after the payment of taxes and social…
Q: 11. Given the following Consumption Function as C = 350 + 0.75 (Y) ; and actual equilibrium real GDP…
A: Solution Option B is correct $25
Q: Suppose, government is undertaking expansionary fiscal policy because of recessionary concerns. How…
A: The fiscal policy of the government would result in the policies of the government involving…
Q: Consider an economy in which the marginal propensity to consume is 0.8 and GDP is currently at…
A: Given; Marginal Propensity to Consume= 0.8 Current GDP= 12000 Tax multiplier=-MPC1-MPCGovernment…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Use the following equations for exercises 16-18. C = $100 + .8Y I = $200 G = $250 X = $100 – .2Y 16. What is the equilibrium level of real GDP? 17. What is the new equilibrium level of real GDP if government spending increases by $150? 18. What is the new equilibrium level of real GDP if government spending and taxes both increase by $150? B the cnonding and tax revenueC = 450 + 0.4YI = 350G = 150X = 70Z = 35 + 0.1YT = 0.15YYf = 1550(Hint: use the multiplier method)Q.2.4 Calculate the tax revenue to the government of this country when the economyremains in equilibrium.Q.2.5 Calculate what the new equilibrium income should be if the government of thiscountry decides to cancel all taxes, implying the tax rate would now be 0%.Q.2.6 Before the government decreased the tax rate, how much of governmentspending was required to bring the economy to full employment?Consider the following economy: C = 300 + 0.8 (Y – T) I = $300 G = $200 and T = $250 What is the equilibrium level of national income? What is the change in national income, if only government spending increases by $10? What is the government spending multiplier? What is the change in national income, if only taxes increase by $10? What is the tax multiplier? Based on (b) and (c), does the balanced budget multiplier theorem hold? What is the change in national income, if both government spending and taxes increase by $10 each?
- Assume that the economy can be modeled as follows: AE = C + I + G C = 300 + .6Yd I = 400 G = 100 T = 200 Y=1700 consumption=1200 7) Imagine the government would like to increase equilibrium GDP to 2,000, what would it have to set the level of government spending to? 8) What is the size of the spending multiplier? 9) What is the size of the tax multiplier?1. If an economy has an MPC of 0.9 what is the multiplier? 2. If an economy has an MPS of 0.2 what is the multiplier? 3. If an economy has an MPC of .08 and the government needs to close a recessionary gap of 20 Billion dollars how much government spending should occur? 4. If an economy has an MPS of .05 and the government needs to close an inflationary gap of 10 Billion dollars how much should government spending decrease?Suppose that the economy is depicted by the following relationship: Expenditures =C+I+G+X where: C = $100+ 0.90 (Y-T) G = $600 T = $600 I = $100 X = $50 The economy is in equilibrium at a level of real GDP or income of $ Now suppose that the government decided to increase taxes by $300. What is the new equilibrium level of GDP or income? $
- Suppose that the economy is depicted by the following relationship: where: C=$100 +0.75 (Y-T) G= $ 600 T = $ 600 1= $200 X = $ 50 Expenditures =C+I+G+X The economy is in equilibrium at a level of real GDP or income of $ Now suppose that the government decides to increase government spending by $50. What is the new equilibrium level of GDP or income? $(Round your answer to the nearest dollar) (Round your answer to the nearest dollar)Use the following equations for exercises C = $ 100 + .8 Y I = $ 200 G = $ 250 X = $100 - .2 Y a.What is the equilibrium level of real GDP? b.What is the new equilibrium level of real GDP if government spending increases by $ 150? c.What is the new equilibrium level of real GDP if government spending and taxes both increases by $ 150?Consider an economy described by the following equations: C = 300 + 0.90 (Y – T) (Consumption) I = $200 (Investment) G = $300 (Government spending) T = $200 (Taxes) Determine the equilibrium level of national income. Suppose government spending increases to $400. What is the new level of income? What is the government spending multiplier? Suppose taxes increase to $300. What is the new level of income? What is the government tax multiplier? Based on your answers to (b) and (c), does the balanced budget multiplier theorem hold?
- Explain graphically the determination of equilibrium GDP for a private economy through the aggregate expenditures model. Now add government purchases (any amount you choose) to your graph, showing its impact on equilibrium GDP. Finally, add taxation (any amount of lump-sum tax that you choose) to your graph and show its effect on equilibrium GDP. Looking at your graph, determine whether equilibrium GDP has increased, decreased, or stayed the same given the sizes of the government purchases and taxes that you selected.17. Suppose MPC = 0.6, and G increases by $350 and Tax increases by $350 simultaneously. How much would GDP change? (NOTE: Refer to your answers from #14 & #15) 18. Suppose MPC = 0.8, and the government intends to increase GDP by $300. To achieve the goal, tax must (increase decrease ) by $C = 450 + 0.4Y I = 350G = 150X = 70Z = 35 + 0.1Y T = 0.15YYf = 1550Calculate the tax revenue to the government of this country when the economy (2) remains in equilibrium.Calculate what the new equilibrium income should be if the government of this (6) country decides to cancel all taxes, implying the tax rate would now be 0%.Before the government decreased the tax rate, how much of government spending was required to bring the economy to full employment?