c. If the government spending multiplier is 5, what is the tax multiplier? d. If the tax multiplier is -3, what is the government spending multiplier? e. If government purchases and taxes are increased by $150 billion simultaneously, what will the effect be equilibrium output (income)?

c. If the government spending multiplier is 5, what is the tax multiplier? d. If the tax multiplier is -3, what is the government spending multiplier? e. If government purchases and taxes are increased by $150 billion simultaneously, what will the effect be equilibrium output (income)?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter18: Debates In Macroeconomics Over The Role And Effects Of Government

Section: Chapter Questions

Problem 3QP

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Financial Statements

Financial statements (or financial reports) are the formal records of the financial activities that are undertaken by a firm. They are convenient instruments used for analyzing a company’s financial position and performance. Financial ratios are created with the help of the numerical values that are derived from the financial statements. They give meaningful information about the financial performance of the company.

Question

Solve c, d and e

Answer the following:
a. MPC = .7.What is the government spending multiplier?
b. MPC = .85. What is the tax multiplier?
c. If the government spending multiplier is 5, what is the tax
multiplier?
d. If the tax multiplier is -3, what is the government
spending multiplier?
e. If government purchases and taxes are increased by $150
billion simultaneously, what will the effect be on
equilibrium output (income)?

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