Continuing the situation in the above question (i.e. suppose the economy begins in a long-run equlibrium at potential output when the government decides to alter speand/or taxes to make the budget deficit smaller). What would be the long-run impact of this action?000unemployment and investment spending are unchangedunemployment is higher and investment spending is unchangedUnemployment is unchanged, but there is more investment spendingunemployment is higher and there is less investment spending

Explanation:Reducing the budget deficit can be achieved through two main methods:Decreasing Spending…

Answered: Continuing the situation in the above…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Figure 25-4 Potential 45 GDP 3 Real GDP In Figure 25-4, if the economy is in a recessionary gap, what must happen to reach potential GDP? The expenditure level must rise and'or the price level must rise. The expenditure level must fall and'or the price level must rise. The expenditure level must fall and'or the price level must fall. The expenditure level must rise and/or the price level must fall. Real Expenditures
2
Read Eye on Booms and Busts. Explain why the NBER reported that the 2008 recession began before real GDP had fallen for two successive quarters. The NBER Committee OA. anticipated the recession was going to happen because real GDP clearly peaked in 2007 OB. based its decision on peaks in the data on real personal income, real manufacturing, wholesale and retail sales, industrial production, and employment, which all peaked between November 2007 and June 2008 OC. made an error because a recession cannot occur unless real GDP falls for two successive quarters O D. saw that the business cycle trough occurred in the second quarter of 2009, so it was obvious that the recession began in 2008
• S = -1250 + 0.4 Y, I= 750 – 1600i | • Ms= 1100, Mt = 0.15Y and Mp = 0.10 Y %3D A. Calculate Y eq, S, I, Mt, Mp and Msp. • B. If the government expenditure increase = 80, calculate the effectiveness of this policy. %3D • C. Draw the graph.
DIREC TIONS: please complete the practice questions on separate paper by hand. AD/AS can show the economy at three different points: • Negative output gap (recessionary gap) • Full employment output (healthy economy, NRU 4-6%) • Positive output gap (inflationary gap) PRACTICE: 1. Draw AD/AS at full employment output: (this is when LRAS, SRAS and AD are all happy together) 2. Draw AD/AS showing a negative output gap: (this is when output is lower than it would be at full employment 3. Draw AD/AS showing a positive output gap: (this is when output is higher than it would be at full employment) 4. Define stagflation 5. Draw an AD/AS graph showing stagflation. 6. If the government steps in to address a positive or negative output gap and uses fiscal and/or monetary policy, which AD/AS curve will shift and why? 7. If the government takes no policy action to address a positive or negative output gap, which AD/AS curve will shift and why? 8. Explain how fiscal policy can be used to correct a…
please include graphs
Q: "Introducing Keynesian Economics" says that Keynes A: - wanted social revolution just like Marx - aggregrate supply is determined by the level of aggregrate demand, the level of aggregrate demand deternines level of employment - aggregrate supply determines aggregrate demand and the market always gives full-employment equilibrium - all of the above
I. Taiwan has an income tax rate, t1, of 28% and a Marginal Propensity to Save (MPS) of 0.4. It is in Eqm but is currently suffering from an "inflationary gap" of $350 m. (that is, Eqm Y>Y full employment, FE, aka Yn). Make the necessary calculations for the to policy that should be instituted. Provide the full name of this policy. II. Most economists believe that tariffs are not the best way to reduce the US trade-balance deficit -- the fact that US IM>US X. (Macro problems should be fixed with macro tools and tariffs are a micro tool.) Derive the identity for Y from the expenditure approach for an open economy to discuss what it means when a country is running a trade-balance deficit and whether it is an economic "good" or "bad." Then derive the twin-deficit identity and use it to explain why the US runs trade-balance deficits and what can be done, if anything, to reduce them. Make all your assumptions clear.
. Find the equilibrium level of national income in the basic Keynesian macroeconomic model: Y=C+I+G C=20+0.75Yd Yd=(1-t)Y
With reference to an Injections and Withdrawals diagram. If this diagram is illustrating a Recessionary Gap. Using Macroeconomic terms explain what this diagram is outlining and what measures a Government may take to correct this economic situation, and why Government may take these actions. You may wish to include a brief analysis relating to current macroeconomic issues
hello, so ive already asked this question but i dont understant the answer that i was given. This is what I have so far: true or false: "tax cuts directed at higher income individuals will do more to stimulate the economy than those directed to lower income individuals, in the keynesian model." my reasoning with this is that its true? can you explain this to me? wouldnt the economy be stimulated more if it was given to a lower income individual because they are most likely to spend it? ANSWER I WAS GIVEN: Step 1 According to Keynes, the economy will be an unstoppable machine operating at maximum capacity if people did not save something. To allow people to spend more, Keynesians suggested tax savings. The Keynesian model, established by British economist John Maynard Keynes portraying savings as a drain on the economy and thus making deficit spending appear superior. However, unless someone keeps all of his or her savings in cash, which is unusual, savings are invested, either by…

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