Aggregate expenditure(billions of 2007 dollars)37534715010010010020045° line AEC300 375Real GDP (billions of 2007 dollars)6. Using the graph above, assume there are no taxes in this economy. Answer thefollowing questions:a.MPC =b.MPM =C.MP to Spend ==Z=d.AE Function =e.Multiplier =f.Equilibrium level of Real GDP is

The link between aggregate expenditure, or total spending, and real GDP is seen in this graph. The…

Answered: Aggregate expenditure (billions of 2007…

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 1.7P

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Give typing answer with explanation and conclusion Suppose that the typical Canadian spends 80 percent of their income. There is an income tax rate is 15% per period. If the government wanted to see the effect of a tax cut of $50 billion, what would be the tax multiplier that they would have to use.
3. Suppose an economy had aggregate demand components with the following relationships: Consumption Spending, C-140 +0.60*(DY) Investment Spending, I-25 +0.15"Y Government Spending, G-0 Net Export Spending, X=0 Tax Collections, Tx = 0 a. What is the equilibrium income for this economy (Show your work)? b. If the Government decided to Increase G spending by 6, what would be the new equilibrium income for this economy (Show your work)? Page 2 bed tooing c. If instead the Government decided to Reduce Tx (taxes) by 10 (i.e., send checks to people), what would be the new equilibrium income for this economy (Show your work)? d. If instead the Government decided to Increase G spending and Increase Tx (taxes) by 20, what would be the new equilibrium income for this economy (Show your work)?
Figure 3-3 45° Planned Expenditure 200 + 0.75Y 45 Income (Y) In the figure above: a. Find the equilibrium GDP. What happens to the left of that equilibrium? What happens to the right? b. When income is $1,000, what is the unplanned inventory? c. What is the GDP multiplier? d. What is the tax multiplier? e. How much should government expenditures increase if the government wants to increase GDP from the equilibrium level found at point a) to 1,000? f. How much should taxes decrease if the government wants to increase GDP from the equilibrium level found at point a) to 1,000? Planned Expenditure
Only typed answer and please don't use chatgpt Suppose the tax multiplier in an economy is -3. How will total spending (TS) change when taxes (T) increase by $300? Group of answer choices TS will decrease by $900 TS will decrease by $100 TS will increase by $900 TS will increase by $100
The economy of Godzillaland is represented by the following:C=50+0.25Y d , T=1000, G=1000, I=100 (a) Calculate the equilibrium level of output. Graph your solution. (b) If the government spending increases by 50 what is the new equilibrium level of output? Use the government spending multiplier. (c) If the government increases taxes by 50 what is the new equilibrium level of output? Use the tax multiplier. (d) If the government increases taxes and spending by 50 what is the new equilibrium level of output? (e) Calculate the equilibrium level of output in case where taxes depend on income according to the following: T=-25+0.125Y.
5. Automatic adjustments to the government budget The following table provides some information on government spending (G) and tax revenues (T) at different levels of real GDP in a hypothetical economy. Note: Throughout this problem you can assume, for simplicity, that government transfers are zero. Real GDP (Billions of dollars) 260 300 340 Government Spending (G) (Billions of dollars) 50 50 50 Tax Revenues (T) (Billions of dollars) 48 50 52 Use the blue line (circle symbols) to plot the government spending schedule presented in the table. Then use the orange line (square symbols) to plot the economy's tax revenues schedule.
Example For an economy the following data is given : Consumption (C) Investment (I) 100 + 0.8 Y. %3D 150 75 Government Expenditure (G) Rate of income tax (T) %3D 0.25Y (a) Find the equilibrium level of incomę. (b) What is the value of multiplier with tax and without tax ?
1. Fiscal Policya. Assume the Economy has an inflationary gap with above average price level, demonstrate this graphically and explain label the short run gdp with A.b. If the US has an MPC of 75% and the government decides to increase spending on social programs by $150 billion, what will happen to GDP (Y) and Price level (P) in the Short Run? Demonstrate and Explain. Label this point B.c. What Fiscal Policy should the Government implement (why?)? What Choices do they have? What will be the effects of this policy on the GDP? Demonstrate and Fully explain (hint: explain the steps as outlined in class)
The aggregate demand function: yad =C+1+G₁ = 500+ 0.75Y is plotted on the graph to the right. The graph also shows the 45° line where aggregate output Y equals aggregate demand yad for all points. What happens to aggregate output if government spending rises by 100? The equilibrium level of output rises by $ billion. (Round your response to the nearest billion.) Consumption Expenditure, C ($ billions) 3000- 2800- 2600- 2400- 2200- 2000- 1800- 1600- 1400- 1200- 1000- 800- 600- 400- 200- 0- 0 yad =C+I+G₁ = 500 +0.75Y Y = yad 45° 400 800 1200 1600 2000 2400 2800 Disposable Income ($ billions)
Y C I G X $ 100 $ 120 $ 20 $ 30 $ 10 $ 300 $ 300 $ 20 $ 30 - $ 10 $ 500 $ 480 $ 20 $ 30 - $ 30 $ 700 $ 660 $ 20 $ 30 - $ 50 14.If government spending increases by $ 15, what is the new equilibrium level of the real GDP? If government spending increases by $ 15 then to find the new equilibrium I can use the recessionary GAP formula Recessionary GAP = GDP Gap / Spending Multiplier (5) 15 = GDP Gap (5) 5 75 = GDP Gap GDP Gap + Old equilibrium level of the real GDP =…
Fl in the missing blanks in the folowing table. Assume for simplicity that taxes are zero. Also assume that the values represent bilions of dollars. National Income and Consumption (C) Saving (S) Real GDP (Y) $12,000 $10,800 $13,000 $11,700 $14,000 $12,600 $15,000 $13,500 $16,000 $14,400 In the above example, the marginal propensity to consume is (Enter your response rounded to two decimal places) In the above example, the marginal propensity to save is (Enter your response rounded to two decimal places)-
The diagram below shows the consumption schedule for a private closed economy. The level of planned investment is $6 billion. a. Using the diagram, draw the aggregate expenditures schedule for this economy and then identify equilibrium GDP. Instructions: (1) Use the tool provided 'C + I'to draw the aggregate expenditures schedule for this economy. (2) Use the tool provided 'Equilibrium' to identify the new equilibrium GDP. Aggregate Expenditures Schedule 50 Tools 40 C+1 Equilibrium 30 20 10 10 20 30 40 50 Real GDP (billions of dollars) Instructions: In part b, enter your answer as a whole number. In part c, round your answer to 1 decimal place. b. What is the equilibrium GDP for this country? billion c. What is the marginal propensity to consume for this country? Aggregate expenditures (billions of dollars) 18

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