Given a full employment level of GDP of 700 Trillion and a current level of 750 Trillion and an MPC of .8 the government would want to (round all calculations to the nearest whole number if necessary) Lower taxes by 24 Increase the interest rate by four points Cut government spending by 17 Both A and C None of the above

Q: taxes and government spending of $40 will: A) increase GDP by $80 B) decrease GDP by $40 C) decrease…

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A: The marginal propensity to consume refers to that portion of the increased income that was spent by…

Q: If government spending increases by 60 and marginal propensity to consume is 0.8, how big will the…

A: Ans. 15.  The government multiplier is the ratio of change in income and change in government…

Q: Hi hlo Expert pro Hand written solution is not allowed.

A: Approach to solving the question: Detailed explanation:To calculate the new total expenditure at GDP…

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A: Marginal propensity to save (MPS) is 0.15 Marginal propensity to import (MPM) is 0.05 Marginal…

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Q: 3. Suppose the MPC is 0.8. The government wants to decrease Total Spending by $600. How should it…

A: GIVEN   MPC = 0.8 decrease in Total spending = $600 (ie. ΔAD) Change in G to achieve (ΔAD=$600)…

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A:

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A: Marginal propensity to consume shows how consumption changes as income changes.

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Q: True/False Calculate MPS when MPC is 0.88

A: MPS: MPS or marginal propensity to save can be defined as the proportion of the rise in the income…

Q: Given the MPC = 0.60 and the potential output is $700 billion, calculate the government expenditure…

A: MPC = 0.60 Potential Output = 700 billion

Q: Suppose the government seeks to achieve a balanced budget by levying taxes of $50 billion and making…

A: If MPC=0.8 then  MPS=1-MPC MPS=1-0.8 MPS=0.2

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A: Tax multiplier = mpc/ 1- mpc

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Q: C = 450 + 0.4YI = 350G = 150X = 70Z = 35 + 0.1YT = 0.15YYf = 1550Q.2.5 Calculate what the new…

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A: MPC = 0.60 Decrease in GDP = 250

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Q: 12. How much must government spending increase to eliminate the GDP gap? e

A: