Suppose in a closed economy, investment is equal to 3 is 6 trillion dollars, government purchases are 4 trillion dollars, and there is a 3 trillion dollar deficit. Calculate taxes. Express your answer in trillions of dollars (so 0.000.000.000.000 would be written as "2")
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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?explanation. Be sure to exp Assume the United States has been in another recession for the past 10 months. Unemployment is 10% and GDP has dropped $1.9 trillion from its previous peak of $ 20.8 trillion. The housing and heavy equipment industries have been hit the hardest. Inflation has been near the 2% target but has started to dip below. Also, the countries average MPC is 60. Determine the best fiscal policy/strategy to help the economy recover and explain why it is the best choice. Be sure to reference Aggregate Demand and Aggregate Supply and explain your specific tools in your answers. Calculations Explanation Graph (More space for the explanation on the back)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.
- K Suppose that real GDP is currently $1.18 trillion, potential GDP is $1.24 trillion, the government purchases multiplier is 2, and the tax multiplier is -1.2. a. Holding other factors constant, government purchases will need to be increased by $ trillion to bring the economy to equilibrium at potential GDP. (Round to four decimal places as needed.) b. Holding other factors constant, taxes have to be cut by $ trillion to bring the economy to equilibrium at potential GDP. (Round to four decimal places as needed.) c. Construct an example of a combination of increased government spending and tax cuts that will bring the economy to equilibrium at potential GDP. The combination of increasing government spending by economy to equilibrium at potential GDP. (Round to four decimal places as needed.) and cutting taxes by $ trillion will bring the3. What is fiscal equalization? Give an example15. If consumers in a country spend 3/4 of their disposable income. If their government increases its spending by 75 trillion and in order to maintain a balanced budget simultaneously increases taxes by 75 trillion. Calculate the effect of the 75 trillion change in government spending and 75 trillion change in taxes on the country’s aggregate demand. 16. If consumers in a country spend 4/5 of their disposable income. If their government decreases its spending by 55 trillion and in order to maintain a balanced budget simultaneously decreases taxes by 55 trillion. Calculate the effect of the 55 trillion change in government spending and 55 trillion change in taxes on the country’s aggregate demand. please make sure calculate the answer accurately
- Suppose the economy is operating at equilibrium, with Y0 5 1,000. If the government undertakes a fiscal change whereby the tax rate, t , increases by .05 and government spending increases by 50, will the budget surplus go up or down? Why?Use the following equations for exercises 16–18. C= $100+.8Y I= $200 G= $250 X = $100.2YJ 7 What curve is meant to impacted by fiscal policy? What direction do policy makers hope to shift the curve?
- |An economy is in a below full-employment equilibrium. What is the effect on aggregate demand and real GDP, and the price level of fiscal stimulus that returns the economy to full employment? What is an example of fiscal stimulus that returns the economy to full employment from a below full-employment equilibrium? Fiscal stimulus that returns the economy to full employment _______ aggregate demand and real GDP, and the price level _______. A. increases; falls B. decreases; falls C. does not change; does not change D. increases; rises The fiscal stimulus that returns the economy to full employment from a below full-employment equilibrium _______. A. could be an increase in government expenditure and an equal increase in taxes B. could be a decrease in government expenditure and an equal decrease in taxes C. must be a decrease in taxes D. must be an increase in government expenditure9)Calculate how much output would expand by if the government increased spending by $500 billion and financed this spending by increasing lump-sum taxes by the same amount.4) What are direct expenditure offsets and how do they influence the effects of fiscal policy?
