Assuming no crowding-out, investment-accelerator, or multiplier effects, a $100 billion increase in government expenditures shifts aggregate demand a. right by $100 billion. b. left by $100 billion. c. left by more than $100 billion. d. right by more than $100 billion
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| a. |
right by $100 billion.
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| b. |
left by $100 billion.
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| c. |
left by more than $100 billion.
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| d. |
right by more than $100 billion.
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- 20. If expansionary fiscal policy in the form of an increase in government spending causes offsetting in part the interest rates to rise, we would expect investment to increase in output. This offset is referred to as a. Increase; multiplier b. Decrease; crowding out c. Increase; crowding in d. Decrease; multiplierSuppose there are both multiplier and crowding out effects but without any accelerator effects. An increase in government expenditures would a. always shift aggregate demand right by a smaller amount than the increase in government expenditures. b. always shift aggregate demand right by a larger amount than the increase in government expenditures. c. shift aggregate demand right by a larger, equal, or smaller amount than the increase in government expenditures. d. always shift aggregate demand right by the same amount as the increase in government expenditures.Which of the following effects results from the change in the interest rate created by an increase in government spending? a. the investment accelerator and crowding out b. the investment accelerator but not crowding out c. crowding out but not the investment accelerator d. neither crowding out nor the investment accelerator
- 21. If taxes a. increase, then consumption increases, and aggregate demand shifts leftward. b. increase, then consumption decreases, and aggregate demand shifts rightward. c. decrease, then consumption increases, and aggregate demand shifts rightward. d. decrease, then consumption decreases, and aggregate demand shifts leftward.4. In the New-Keynesian model where government expenditure is financed through taxation only, if government expenditure increases by 100, which of the following is true? A. Income will increase by 100. B. Income will increase by more than 100 as the fiscal multiplier is greater than 1. C. Income will not change as the increase in government expenditure would crowd out private consumption. D. Income will increase, but we can't say by how much.PLEASE ANSWER THE QUESTIONS. * the attached photo is just connected to these questions. * If the current real GDP is P700 billion, which of the following policies would bring the economy to potential output? a. increase government spending by P25 billion b. increase government spending by P100 billion c. increase government spending by P20 billion d. decrease government spending by P100 billion. The tax multiplier is: a. -0.8 b. -1.25 c. -5 d. -4
- Question 37 Assume the MPS is 0.25. Assuming only the multiplier effect matters, a decrease in government purchases of $100 billion will a. decrease Real GDP by $100 billion. b. increase Real GDP by $133.33 billion. c. decrease Real GDP by $400 billion. d. increase Real GDP by $400 billion. e, decrease Real GDP by $133.33 billion. f. none of the above is correct.please explain If an economy is experiencing an contractionary gap of 260 billion and the expenditure multiplier is 2, calculate how much government expenditures need to change to close the gap. Select one: a. increase by $260 billion. b. decrease by $130 billion. c. increase by $130 billion. d. decrease by $260 billion.If the multiplier is 4, government spending rises by $200, and taxes increase by $200, equilibrium income will: A. RISE BY $200. B. RISE BY MORE THAN $200. C. FALL BY $200. D. FALL BY LESS THAN $200. E. NOT CHANGE.
- 4. In the US the unemployment rate for January 2000 was 4.0%. In January 2000, the US had GDP of $10.04 trillion, while potential GDP for the same year was $9.47 trillion. Assume the marginal propensity to consume is 0.93. a. What is the GDP gap in January 2000? b. Using the concept of the spending multiplier, in theory, how much would government spending have to change to close the gap? c. Using the concept of the tax multiplier, in theory, how much would taxes have to change to close the gap?When the MPC increases: a. the government spending multiplier stays the same b. the government spending multiplier decreases c. the government spending multiplier also increases d. the government spending multiplier could increase or decreases e.depending on whether government spending is increasing or decreasingWhat is true about the balanced budget multiplier? A. The balanced budget multiplier is positive because an increase in government expenditure increases disposable income. B. When both government expenditure and taxes decrease by $1, aggregate demand decreases. C. The balanced budget multiplier is equal to zero. D. The balanced budget multiplier is the magnification effect on aggregate demand of a simultaneous increase in aggregate demand and an equal decrease in taxes.