Explain, using appropriate diagrams, how a rise in the household saving rate can cause a fall in GDP, and how a fiscal stimulus might offset this.

6 T/F/U. To counterbalance a decrease in investment during a recession, governments offer tax credits to increase investment. Draw and label a figure showing why this is or isn't the case.

Answer exercises 11-14 on the basis of the following information. Assume that equilibrium real GDP is $800 billion, potential real GDP is $950 billion, the MPC is .80, and the MPI is .40.

Using examples from 2008-currently, explain fiscal policy. In your answer be sure to include what Fiscal Policy is and how some of the recent policies have impacted the economy (GDP and Budgets) in both the short term and the long term.

Consider an economy with the following situation: C = 50 +0.8 Yd  I=100;T= 100 G =150   a. To eliminate the gap, the government decides to change its expenditure G. By how much should G change? Show that income AE or Ye is now 900 after the change in G. b. If the government decides to adopt balanced budget spending, by how much G and T will change to reach full employment output or income?

During a recession, does G or I fall more? Why? G = goverment spending I = investment spending

Please solve step by step and quick

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Consider the following picture. c' A D B E F Suppose that the government changes government spending: it increases G and decreases G', but leaves T and T' unchanged. The interest rates in the economy are also unchanged. What happens to the budget line of the consumer? O It expands to the right: the consumer will be able to consume more in the present, and less in the future It contracts to the left: the consumer will be able to consume less in the present, and more in the future O It's unchanged O Impossible to tell!

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