Given that the full employment output is $2,500 and the equilibrium real GDP is $2,800, and the MPS (=Marginal Propensity to Save) is 0.25, which of the following taxation changes would most likely bring the economy to a full employment level of real GDP? Group of answer choices $75 increase in taxes $100 decrease in taxes $75 decrease in taxes $100 increase in taxes

Q: Explain the effect of a discretionary cut in taxes of $50 billion on the economy when the economy's…

A: Both a tax cut and increase in government spending are expansionary fiscal policy tools, aimed to…

Q: If the MPC is 0.80 and the government increases transfer payments by $45 billion, then the initial…

A: When government increases transfer payments it results in more disposable income to spend. . A rise…

Q: Explain and show the consequence for fiscal policy if the marginal propensity to consume is a…

A: Fiscal policies are the public authority made approaches made to control, fortify and support the…

Q: ncrease transfer payments B) increase government purc ncrease consumption taxes D) increase interest…

A: ​As per general equilibrium models in contemporary macroeconomics, expansionary fiscal policy could…

Q: Policy Options for Closing Output Gap Increase in Spending Tax Cut Spending Multiplier Tax…

A: Fiscal policy is the use of government spending and taxation to influence the economy.Fiscal policy…

Q: All of the following are automatic fiscal stabilizers EXCEPT O a congressionally mandated decrease…

A: An automatic stabilizer is a policy in effect at all the time in an economy and works inverse of the…

Q: real GDP = (Change in Taxes) X Change in equilibrium (Tax Multiplier) Change in equilibrium real GDP…

A: Initial change in the tax or investment causes multiple change in final income. The value of…

Q: Expansionary fiscal policy occurs when the government decreases spending or increases taxes to…

A: Fiscal policy is the tool used by government to control the economy.

Q: Discretionary fiscal policy is policy that permanently changes government spending to slow the…

A: Fiscal policy refers to the use of government taxation and spending to influence and manage the…

Q: Suppose that the economy is experiencing a recession with an estimated recessionary gap of $30…

A: Recessionary Gap or the contractionary gap is a situation in an economy or nation when the country’s…

Q: Explain how the conduct of fiscal policy affects consumption and investment in equilibrium.

A: Fiscal policy is a macroeconomic policy that is implemented by the government for monitoring and…

Q: 1) Under which of the following scenarios would an expansionary fiscal policy be more effective?…

A: In an economy, expansionary fiscal policy refers to the situation when government tries to increase…

Q: Suppose that real GDP for an economy is currently 16,000 billion, the government purchases…

A: Fiscal policy refers to the actions taken by the government to intefere in the economic activity and…

Q: 000 00-50,000 00-80.000 0.9 0.8 0.75

A: Spending multiplier = 1 / 1-MPC Tax multiplier = Spending multiplier – 1

Q: Discuss one likely affect of fiscal policy financed via the accumulation of additional government…

A: Fiscal policy is related to government spending and use of taxes as well as subsidies for the…

Q: Compare expansionary and contractionary fiscal policy.

A: Disclaimer: “Since you have asked multiple questions, we will solve the first question for you. If…

Q: Suppose the government enacts a stimulus program composed of $400 billion of new government spending…

A: It is given that the government increases government spending by $400 billion and it is also given…

Q: Suppose the economy is in equilibrium at point B which is below the full-employment output of point…

A: Macroeconomics examines the working, composition, and dynamics of an economy. AD/AS model is used…

Q: True/False 1) Unemploymen benefits are an example of fiscal policy.2) According to Ricardian…

A: A transfer payment is a redistribution of income facilitated by the government of an economy as it…

Q: Suppose the economy is in a recession, which of the following fiscal policy can the government use…

A: A recession is a macroeconomic word for a large drop in overall economic activity in a certain area.…

Q: If a tax rate of 1/3 of national income were introduced, what would be the new equilibrium level of…

A: C = 10 + 0.75Y  I = 20 G = 40    Now; T (taxes) = 1/3*Y or 0.33Y   Thus; C = 10 + 0.75(Y-T)

Q: Suppose equilibrium GDP is less than full-employment output and the economy is in a recession. What…

A: If the economy is in a slump and equilibrium GDP is below full employment, the government's goal…

Q: Discuss the consequence of a rise in direct taxes to the economy as a whole

A: Taxes: The direct tax included the income tax that is levied on the income of an individual. Income…

Q: Suppose equilibrium GDP is less than full-employment output and the economy is in a recession. What…

A: Fiscal policy is used by government to make the economy going normal without any fluctuations. The…

Q: During a recession, the government decides to give an additional child tax credit to households of…

A: Recession occurs when there is a fall in the aggregate demand in the economy. The fall in the…

Q: Suppose actual real GDP is $13.56 trillion, potential real GDP is $12.34 trillion, and the marginal…

A: Given Actual real GDP =$13.56 trillion Potential GDP =$12.34 trillion.Marginal propensity to consume…

Q: Government spending in Robok is $150 billion, and its only tax is an income tax with a marginal tax…

A: Government spending= $150 billion Marginal tax rate= 0.3 Government budget= $440

Q: 16. Suppose that planned investment and planned government purchases do not depend on income: I = 15…

A: Equilibrium refers to a point of balanced situation in the economy. At the equilibrium, aggregate…

Q: Classify each statement based on the type of fiscal policy to which it refers. Expansionary fiscal…

A: The fiscal policy action that is used by the government to increase the aggregate demand is known as…

Q: If taxes (T) increase, total expenditures decrease. In what direction does the demand curve shift?…

A: Aggregate demand (AD) is the sum total amount of commodities and services demanded in an economy at…

Q: Suppose that real GDP is currently $17.1 trillion, potential GDP is $17.4 trillion, and the tax…

A: Real GDP refers to the total value of goods and services produced by a country's economy during a…

Q: Which of the following would be most likely to induce Congress and the president to conduct…

A: Fiscal policy refers to the policy under which the state or government uses instruments such as…

Q: Discuss ONE likely effect of fiscal policy financed via the accumulation of additional government…

A: Government borrowings assumes a significant part in government's accounts to meet its the public…

Q: The following set of equations describes the economy of a country A, in Africa C = 2000 + 0.75Id…

A: Macroeconomics analyzes the economy as a whole. It studies aggregate economic concepts such as…

Q: Explain how time lags present an additional problem in fiscal policy.

A: Fiscal policy is policy of expenditure and taxes. Fiscal policy is operated by the government. Lags…

Q: Suppose some imaginary economy is currently experiencing deficient aggregate demand of $64 billion.…

A: A fiscal policy is one in which the government uses taxation, government spending, and government…

Q: discuss the Fiscal policy of Demand Side and Market-oriented and Interventionist policies of the…

A: Interventions: It refers to the government process that helps the market failure to get clear. It…

Q: Which of the following accurately describes the phenomenon of crowding out?     government…

A: Aggregate demand is composed of consumption spending, investment spending, government purchases and…

Q: suppose the government wishes to illuminate recess or a gap of 100 billion in the MPC is .075 how…

A: Given, Gap = 100 billion MPC = .075

Q: Expansionary fiscal policy occurs when the government increases __________, decreases __________, or…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: At the beginning of 2009, a government had a total debt of $540 billion dollars. It ended 2009 with…

A: A budget surplus happens when pay surpasses uses. The term frequently alludes to an administration's…

Q: Suppose that autonomous consumption (a) is 300, private investment spending(I) is 420, government…

A: We know, from the basic macroeconomic identity, that  Y = C(Y - T) + I + G Here, we have I = 420, T…