that a hypothetical economy with an MPC of 0.8 is experiencing severe recession Instructions: In part a round your answers to 2 decimal places Enter your answers as positive numbers in part & as whole numbers. a. By how much would government spending have to rise to shift the aggregate demand curve rightward by 50 on? 10.00 bilion How large a tax cut would be needed to achieve the same increase in aggregate demand? S 13 billion Determine one possible combination of government spending increases and tax increases that would accomplish the same goal thout changing the amount of outstanding debt (e, maintaining the budget balance at its current value) mcrease spending by

In the dynamic model of AD-AS in the figure to the right, if the economy is at point A in year 1 and is expected to go to point B in year 2, Congress and the president would most likely pursue OA expansionary fiscal policy. OB. expansionary automatic stabilizers. OC. contractionary fiscal policy. OD. contractionary monetary policy. OE. expansionary monetary policy. Click to select your answer MacBook Air Price Level 104 100 101 LRAS, LRAS₂ A B 11113AD Real GOP SRAS, SRAS₂ AD₂

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Figure 16-7 Price level P3 a P₂ P₁ 0 LRAS A increase taxes LRAS 8 с Y₂ Ya contractionary fiscal policy O increase government spending O decrease interest rates SRAS₁ AD₁ SRAS AD₂ Refer to Figure 16-7. Given that the economy has moved from A to B in the graph above, which of the following would be the appropriate fiscal policy to achieve potential GDP? Real GDP (trillions of dollars)

How much government spending needs to be increased to maintain full employment in the economy If the economy was facing recessionary gap of $900 billions? Assume MPC is .9. How much tax cut should government give if they wanted to eliminate this recessionary gap through tax cut?

Help The aggregate demand curve can be derived from the aggregate expenditures model as indicated by the fact that Multiple Choice an increase in the price level shifts the aggregate expenditures schedule upward and increases real GDP a decrease in the price level shifts the aggregote expenditures schedule downward and decreases real GDP a decreose in the price level shifts the aggregate expenditures scheduie upiward and decreases real GDP an increase in the price level shifts the eggregate expenditures schedule downverd and decreases real GDP

Only typed answer  The federal government decides to stimulate the economy and increases government expenditure on new infrastructure projects by $100 billion. The marginal propensity to consume is MPC = 0.3 and the marginal propensity to import is MPI = 0.08. Assuming no crowding out effect, what is the increase in output caused by the stimulus package of$100 billion in a closed economy?

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Suppose the government, in an effort to avoid an increase in the deficit, votes for a budget neutral tax cut policy. Assume the marginal propensity to consume (MPC) is equal to 0.75 and taxes are cut by $15 billion. Round answers to the nearest billion, and specify decreases as a negative number. By how much will government spending change? change in government spending: $ What is the resulting change in the equilibrium level of real GDP? change in equilibrium level of real GDP: $ billion billion