Suppose the government seeks to achieve a balanced budget by levying taxes of $50 billion and making expenditures of $100 billion. How will this affect GDP if MPC=0.8?
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Suppose the government seeks to achieve a balanced budget by levying taxes of $50 billion and making expenditures of $100 billion. How will this affect GDP if MPC=0.8?
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- Suppose an economy has an MPC = 0.875. 1. If government spending increase by $100, how much will the GDP change?suppose the government wishes to illuminate recessionary of a gdp of 100 billion in the MPC is .075. How much must the government increase in spending? Instead of increasing government spending by the amount you calculated what would be the effect of the government decreasing taxes by this amount explain?If MPC is = 0.6 and government spending decreases by dollar 100 billion, what happens to equilibrium GDP.
- Suppose the MPC = 0.6? What will be the government spending multiplier? If, in this economy, government spending (G) increases by $300, what will happen to Total Spending? Show your workin another economy, the MPC = 4/5, government needs to increase expenditures $20 to complete a project, but it does not want to increase debt so it increases taxes $20 also. What, if any, will be the change in output generated by this balanced - budget expenditure scenario?the new equilibrium level of real GDP if government spending increases by $150? 18. What is the new equilibrium level of real GDP if government spending and taxes both increase by $150? 19. Make a graph showing the spending and tax revenue of your state government for as many years as you can find (use the government of your home country if you are not from the United States). What trends do you notice? What spending categories make up the largest share of the state budget? What are the largest sources of revenue?
- Calculate the net cumulative change in aggregate expenditure if taxes were cut by $200 billion and MPC is estimated to be .75. What if government expenditure was increased by $200 billion? (Hint: Total change in expenditure = multiplier x new expenditure or spending injection)The MPC is 0.5. what happens to the real GDP if the government increases spending by $10 million?Suppose MPS=0.68 and MPI=0.17 19. What is the spending multiplier? 20. What is the level of real GDP if the government increases spending by 300 million dollars? 21. What is the level of real GDP if the government decreases spending by 350 million dollars?
- You have the following information. Calculate equilibrium GDP and enter your number in the box below. C = 200 + 0.75YD | = 800 G = 600 The government has a balanced budget.C is consumer expenditure T is tax revenue Y is aggregate output I is investment expenditure r is interest rate G is government expenditure L is money demand M is money supply Derive the relevant matrix inverse (do not use Cramer's rule) to solve for the equilibrium level of income in terms of government expenditure (G). At what level of public spending does the government balance its budget? (Hint: the endogenous variables are Y and r).Our economist estimate that citizens in our country have an MPC of 0.90. To increase GDP by $1,000, how much should we increase government spending?