Suppose the government increases taxes by $140 billion and the marginal propensity to consume is 0.60. by how much will equillibrium gdp change.
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- “If taxes and government spending are increased by the same amount, there will be no effect on equilibrium GDP.” True or false? Explain and support your answer using a specific hypothetical example.If takes are decreased by $200 billion, given an MPC of.6, calculate the change in GDP. Give your answer in billions.Suppose that exports increase by $300 billion, given an MPC of.75. Calculate the change in GDP. Give your answer in billions and leave off the dollar sign. Be sure to include a negative sign if appropriate.
- MPC in an economy is 0.8. if investment is increased by dollar 5 million, how much would be increase in income.The country is experiencing a serious rise in inflation which the government wants to control through fiscal policy. The Government will decrease spending by $20 million and increase taxes by $15 million. The marginal propensity to consume (MPC) is 0.80. What will be the effect on GDP and by how much?The government decides to levy a lump-sum taxes by $50 billion which will reduce disposable income. If the MPS=0.25, what effect will this have on GDP?
- As a result of increase in investment by $125, national income increases by $500. Calculate marginal propensity to consume.Suppose the government increases expenditures by $100 billion and the marginal propensity to consume is 0.50. By how will equilibrium GDP change? The change in equilibrium GDP is: $ billion. (Round your solution to one decimal place.)determine the equilibrium level of real GDP and the MPC.
- The government of a country decides to double its current level of spending, causing real GDP to increase from $20,000 to $120, 000. What is the percent change in real GDP?Which of the following components of aggregate expenditure is most subject to crowding out? a. Consumption expenditures b. Government purchases of goods and services c. Imports d. Investment spending e. National savingWhat will be the ultimate effect on GDP and P?