ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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The following table provides some information on government spending (G) and tax revenues (T) at different levels of real GDP in a hypothetical
economy.
Note: Throughout this problem you can assume, for simplicity, that government transfers are zero.
Real GDP
(Billions of dollars)
Government Spending (G)
Tax Revenues (T)
(Billions of dollars)
(Billions of dollars)
260
50
48
300
50
50
340
50
52
Use the blue line (circle symbols) to plot the government spending schedule presented in the table. Then use the orange line (square symbols) to plot
the economy's tax revenues schedule.
GOVERNMENT SPENDING AND TAXES (Billions of dollars)
8
48
46
200 220 240 260 280 300 320 340 360 380 400
REAL GDP (Billions of dollars)
G
T
Deficits
Surpluses
Consider the government spending and tax revenues schedules you plotted. When real GDP is $380 billion, the government runs a budget
of
Use the purple triangle (diamond symbols) to shade the region between the tax revenues schedule and the government spending schedule in which
the levels of real GDP are associated with government budget deficits. Then use the green triangle (triangle symbols) to shade the region between the
two schedules in which the levels of real GDP are associated with budget surpluses.
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Transcribed Image Text:The following table provides some information on government spending (G) and tax revenues (T) at different levels of real GDP in a hypothetical economy. Note: Throughout this problem you can assume, for simplicity, that government transfers are zero. Real GDP (Billions of dollars) Government Spending (G) Tax Revenues (T) (Billions of dollars) (Billions of dollars) 260 50 48 300 50 50 340 50 52 Use the blue line (circle symbols) to plot the government spending schedule presented in the table. Then use the orange line (square symbols) to plot the economy's tax revenues schedule. GOVERNMENT SPENDING AND TAXES (Billions of dollars) 8 48 46 200 220 240 260 280 300 320 340 360 380 400 REAL GDP (Billions of dollars) G T Deficits Surpluses Consider the government spending and tax revenues schedules you plotted. When real GDP is $380 billion, the government runs a budget of Use the purple triangle (diamond symbols) to shade the region between the tax revenues schedule and the government spending schedule in which the levels of real GDP are associated with government budget deficits. Then use the green triangle (triangle symbols) to shade the region between the two schedules in which the levels of real GDP are associated with budget surpluses.
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