Question 24 In the definition of marginal propensity to consume, marginal refers to the amount of additional tax revenue that the government receives with new taxes the additional amount of disposable income someone receives the total income someone receives as a result of government purchases the amount of extra taxes someone pays as a result of government purchases
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3 In the definition of marginal propensity to consume, marginal refers to ______.
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- Explain the difference between the government purchases multiplier and the net tax multiplier. If the MPC falls, what happens to the tax multiplier?Why is spending by the U.S. government on scientific research at NASA fiscal policy while spending by the University of Illinois is not fiscal policy? Why is a cut in the payroll tax fiscal policy whereas a cut in a state income tax is not fiscal policy?An open-economy is characterized by the following: C = 750 +0.8 (Y-T) $$1-1500$$ G = 250 T = 200 X = 800 M = 0.4Y
- Some politicians have suggested that the United States enact a constitutional amendment requiring that the Federal government balance its budget annually. Such an amendment, f strictly enforced, would force the government to enact a contractionary fiscal policy whenever the economy experienced a severe recession. This is because when the economy enters a recession, 0000 net tax revenue falls and transfer payments rise. Balancing the budget would require raising transfer payments and raising taxes. net tax revenue rises and transfer payments fall. Balancing the budget would require raising transfer payments and lowering taxes. net tax revenue falls and transfer payments rise. Balancing the budget would require lowering transfer payments and raising taxes net tax revenue rises and transfer payments fall. Balancing the budget would require lowering transfer payments and lowering taxesFigure 8-23. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. 6 on4m21 3 Tax Revenue B Tax Size Refer to Figure 8-23. If the economy is at point A on the curve, then a small increase in the tax rate will O increase the deadweight loss of the tax and increase tax revenue. O increase the deadweight loss of the tax and decrease tax revenue. decrease the deadweight loss of the tax and increase tax revenue. O decrease the deadweight loss of the tax and decrease tax revenue.15. If consumers in a country spend 3/4 of their disposable income. If their governmentincreases its spending by 75 trillion and in order to maintain a balanced budgetsimultaneously increases taxes by 75 trillion. Calculate the effect of the 75 trillion change ingovernment spending and 75 trillion change in taxes on the country’s aggregate demand.
- suppose the government wishes to illuminate recess or a gap of 100 billion in the MPC is .075 how much must’ve government increase in spending instead of increasing government spending by the amount you calculated what would be the effect of the government decreasing taxes by this amount explain?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…What is the effect of a rise in the income tax on interest income? A rise in the income tax on interest income ______. A. increases the before-tax interest rate paid by borrowers and decreases borrowing and investment B. increases the after-tax interest rate received by lenders and increases saving C. decreases the before-tax interest rate paid by borrowers and increases borrowing and investment D. decreases the after-tax interest rate received by lenders and increases lendin
- Consider a closed economy. The profits of private corporations constitute a fraction ?of national income. These profits are subject to corporate tax and a fraction ? of the net profits is distributed to owners. The remaining profits are invested in theeconomy. To encourage investment, the government proposes to cut the corporation tax. The corporation tax is proportional and so is the regular tax but the rates are notnecessarily the same.Analyse the effects of the government proposal assuming that wages and pricesare flexible. Will there be any ambiguity about the results?Question 20 In which case will the government collect more tax revenue if tax revenue is tax rate multiplies income? 4% tax rate and $80,000 average income 90% tax rate and $15,000 average income 30% tax rate and $40,000 average income O 15% tax rate and $95,000 average incomea greatera smallerdecrease in government spendingdecrease in net taxesincrease in government spendingincrease in net taxesnono change in government spendingno change in net taxes