Suppose that the government of Ansonia is experiencing a large budget surplus with fixed government expenditures of G = 250 and fixed taxes of T = 200. Both G and T are independent of income. Assume that consumers of Ansonia behave as described in the following consumption function. C = 300 +0.75(Y-T) Suppose further that investment spending is fixed at 1= 200. Calculate the equilibrium level of GDP in Ansonia. Solve for equilibrium levels of Y, C, and S. Y = (Round your response to two decimal places.) C=(Round your response to two decimal places.) S=(Round your response to two decimal places.) Now, assume that the Republican Congress in Ansonia succeeds in reducing taxes by 30 to a new fixed level of 170. Determine the value of the tax multiplier. Tax multiplier = (Round your response to two decimal places and include a minus sign if necessary)

Suppose that the government of Ansonia is experiencing a large budget surplus with fixed government expenditures of G = 250 and fixed taxes of T = 200. Both G and T are independent of income. Assume that consumers of Ansonia behave as described in the following consumption function. C = 300 +0.75(Y-T) Suppose further that investment spending is fixed at 1= 200. Calculate the equilibrium level of GDP in Ansonia. Solve for equilibrium levels of Y, C, and S. Y = (Round your response to two decimal places.) C=(Round your response to two decimal places.) S=(Round your response to two decimal places.) Now, assume that the Republican Congress in Ansonia succeeds in reducing taxes by 30 to a new fixed level of 170. Determine the value of the tax multiplier. Tax multiplier = (Round your response to two decimal places and include a minus sign if necessary)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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