If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of $80 billion by cutting taxes by

Suppose that the economy is experiencing a recession with an estimated recessionary gap of $30 billion. Congress is considering the use of fiscal policy to ease the recession, but due to current political sentiments, it has determined that the maximum spending increase the government is willing to support is $6 billion. It wants to make up the remainder of the recessionary gap using tax cuts. If a spending increase of $6 billion is approved and the MPC is 0.75, by how much will taxes need to be reduced to close the remainder of the recessionary gap? Instructions: Round your answer to 2 decimal places. $____billion

The marginal propensity to save is 0.20. Equilibrium GDP will decrease by $75 billion if the aggregate expenditures schedule decreases by. make sure the answer is accurate. Group of answer choices $15 billion. $150 billion. $20 billion. $5 billion.

If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of $160 billion by cutting taxes by Multiple Choice $200 billion. $160 billion. $80 billion. $128 billion,

Q)If the MPC .8 and we have a 200B GDP Gap, how much will initial expenditures need to increase to bring the economy to full employment GDP.

If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of S80 billion by cutting taxes by S100 billion. S80 billion. S20 billion. S64 billion.

If the MPC is 0.8 and investment increases by $5 billion, the equilibrium GDP will Multiple Choice   increase by $25 billion.   increase by $4.0 billion.   decrease by $6.25 billion.   increase by $6.25 billion.

The government spends an additional $926 billion and the marginal propensity to consume is 66%. How much will GDP increase due to this additional government spending? Enter your answer in billions and round to two decimal places.

The marginal propensity to consume out of permanent income equals 0.9 and the marginal propensity to consume out of transitory income equals 0.1. Suppose that there is an emergency increase in government spending of $200 billion to repair infrastructure. The spending takes place within a year. The spending increase is financed by a one-time increase in taxes. Prior to the increase in government spending, permanent income equals $9,600 billion and transitory income equals zero. (a) Compute the amounts of consumption expenditures and private saving prior to the tax increase. (b) Compute the amount of changes in consumption expenditures and private saving, given that the tax increase lasts for only one year. (c) Compute the initial change in aggregate demand that results from this combination of increases in government spending and taxes.

Suppose the president is successful in passing a $5 billion tax increase. Assume that taxes are fixed, the economy is closed, and the marginal propensity to consume is 0.75. What happens to equilibrium GDP? There is a $20 billion increase in equilibrium GDP. There is a $20 billion decrease in equilibrium GDP. There is a $15 billion increase in equilibrium GDP. There is a $15 billion decrease in equilibrium GDP.