Assume MPS-.3, Actual Real GDP-$560 and Potential Output $300. Answer the following questions: A. By how much would the government increase or decrease government spending to close this gap? B. By how much would the government increase or decrease taxes to close the Gap? $78.1 decrease: $111.59 increase $300 decrease: $260 decrease m $111.59 decrease; $78.1 decrease Not enough information provided

Assume MPS-.3, Actual Real GDP-$560 and Potential Output $300. Answer the following questions: A. By how much would the government increase or decrease government spending to close this gap? B. By how much would the government increase or decrease taxes to close the Gap? $78.1 decrease: $111.59 increase $300 decrease: $260 decrease m $111.59 decrease; $78.1 decrease Not enough information provided

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section9.A: The Simple Algebra Of Income Determination And The Multiplier

Problem 4TY

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1. Suppose the MPC is .90 and the MPI is .10. if government expenditure goes up $100 billion while taxes fall $10 billion, what happen to the equilibrium level of real GDP? Use following equations for exercise 2-4 C= $100 + .8Y I=$200 G= $250 X = $100 - .2Y 2. What is the equilibrium level of real GDP? 3. What is the new equilibrium level of real GDP if government spending increases by $150? 4. What is the new equilibrium level of real GDP if government spending and taxes both increase by $150? 5. Make a graph showing the spending and tax revenue of your state government for as many years as you can find (use the government of your home country if you are not from the United States). What trends do you notice? What spending categories make up the largest share of the state budget? What are the largest sources of revenue?
2. Use the following equations for exercises to answer the following questions. C = $100 + 0.8Y I= $200 G= $250 X= $100 – 0.2Y %3D %3D 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 increase by $150?
Y C I G X $ 100 $ 120 $ 20 $ 30 $ 10 $ 300 $ 300 $ 20 $ 30 - $ 10 $ 500 $ 480 $ 20 $ 30 - $ 30 $ 700 $ 660 $ 20 $ 30 - $ 50 14.If government spending increases by $ 15, what is the new equilibrium level of the real GDP? If government spending increases by $ 15 then to find the new equilibrium I can use the recessionary GAP formula Recessionary GAP = GDP Gap / Spending Multiplier (5) 15 = GDP Gap (5) 5 75 = GDP Gap GDP Gap + Old equilibrium level of the real GDP =…
12. If MPC in an economy is 0.71 and government spending increases by 1,274, what will overall GDP increase by? Please round to two decimal places where needed._________. 13. Potential GDP equals $500 billion. The economy is currently producing GDP equal to $450 billion. If the MPC is 0.67, then autonomous spending must change by $______ billion for the economy to move to potential GDP? Please round to two decimal places where needed._________.
Answer exercises 11-14 on the basis of the following information. Assume that equilibrium real GDP is $800 billion, potential real GDP is $950 billion, the MPC is .80, and the MPI is .40.
Refer to the following table for Waxwania: Government Expenditures, G $ 170 170 Tax Revenues, T $ 90 110 130 Real GDP $ 450 550 170 650 170 150 750 170 170 850 Instructions: In part a, enter your answers as a whole number. In part b, round your answer to 2 decimal places. a. Suppose that Waxwania is producing $550 of real GDP, whereas the potential real GDP (or full- employment real GDP) is $650. How large is its budget deficit? How large is its cyclically adjusted budget deficit? b. How large is its cyclically adjusted budget deficit as a percentage of potential real GDP? percent c. Is Waxwania's fiscal policy expansionary, or is it contractionary? (Click to select) :
GDP $0 1 2 Consumption $0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 D 8 4.5 As shown in Exhibit 9-1, if equilibrium GDP is $5 trillion, then the total of investment, government spending, and net exports is: 8 4.5 As shown in Exhibit 9-1, if equilibrium GDP is $5 trillion, then the total of investme O $1 trillion. $2 trillion. O $3 trillion. O $4 trillion. $6 trillion. 4 Aggregate Expenditures 6 Unplanned inventory
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? 19. Make a graph showing the spending and tax revenue of your state government for as many years as you can find (use the government of your home country if you are not from the United States). What trends do you notice? What spending categories make up the largest share of the state budget? What are the largest sources of revenue?
Give typing answer with explanation and conclusion Suppose that the typical Canadian spends 80 percent of their income. There is an income tax rate is 15% per period. If the government wanted to see the effect of a tax cut of $50 billion, what would be the tax multiplier that they would have to use.
Overall Price Level 49 43 32 19 AD2 AS O Increase government spending: $19 O Increase taxes; $26 O increase taxes; $19 O Increase government spending; $29 AD 26 29 Real GDP Please refer to the graph above. Assume we begin in equilibrium at ADO and AS. Ceteris paribus, which fiscal policy will lead to which initial real GDP?
The table below shows hypothectical figures of revenue and spending for the Canadian government. For simplicity, assume that all of the spending grants to other levels of government were spent in Canada on goods and services. REVENUES Personal income taxes Corporate income taxes $120 28 2 48 18 Other revenues 21 Total Revenues 237 a. The projected NTR in this budget plan is $ b. The value of NTR less government spending on goods and services (G) is $ Round your answers to 1 decimal place. c. The percentage of total revenue made up by personal income taxes is d. The percentage of total revenue made up by corporate income taxes is e. The percentage of total outlays made up by transfer payments to persons is f. The percentage of total outlays made up by public debt charges is Federal Government's Budget Plan for Fiscal Year ($billion) OUTLAYS Other income taxes GST and excise taxes EI premiums Transfers to persons Spending grants to other levels of government Public debt charges Direct…
Use the following equations for exercises 16–18. C= $100+.8Y I= $200 G= $250 X = $100.2Y