Q: If the spending multiplier is 2.5 and the economy is in a $500 billion contractionary gap, how much…

A: The contractionary gap means real GDP is less than the potential GDP such that that the economy is…

Q: what will happen to the aggregate demand If government purchases increase by $100 billion, and the…

A: Aggregate demand (AD): - It is the total demand of goods and services in an economy at a particular…

Q: suppose the government wishes to illuminate recessionary of a gdp of 100 billion in the MPC is .075.…

A: To calculate increase in government spending we have to first calculate the spending multiplier.

Q: Why would a higher tax rate lower the government purchases multiplier? What does the tax rate have…

A: Let us take the equilibrium condition of the goods market - Y = C + I + G  Where , C = c0 + c1 (Yd )…

Q: Why is a $100 billion increase in government spending on goods and services more expansionary than a…

A: According to the aggregate expenditure model Total income (Y) = Consumption (c +b(Y-Taxes) +…

Q: The following data are for the economy of Moksha.   C = 30 + 0.6Y   G = 150 I = 60   XN = 50 −…

A: C=30 + 0.6Y  ---------> Consumption function G=150 -------------> Government expenditure I=60…

Q: The average propensity to consume of a person is 0.6 and the marginal tax to consume is also 0.6.…

A: Average propensity to consume (APC) = 0.6 Average propensity to save (APS) = ?

Q: Suppose that the typical Canadian spends 80 percent of their income. There is an income tax rate is…

A: The tax multiplier helps to measure how the change in taxes will alter GDP. The consumer spending…

Q: How does fiscal policy affect the equilibrium income in an economy

A: The fiscal policy is the use of government revenue (taxes or tax cut) and the government…

Q: Calculate MPS if it's given that multiplier is 7.9

A: The data presented in the question is as follows:- We are given with the value of multiplier which…

Q: Define the Tax Multiplier and the Balanced Budget Multiplier.

A: The multiplier measures the amount by which equilibrium level of income changes when the autonomous…

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: If the marginal propensity to save in an economy is 0.2, and the marginal propensity to import is…

A: The objective of the question is to calculate the multiplier in an economy given the marginal…

Q: Suppose the tax multiplier in an economy is -3. How will total spending (TS) change when taxes (T)…

A: Since tax multiplier is -3, it means that if T decreases by $1, TS increases by $3. So, When T…

Q: What are the short-run and long-run implications when it comes to government spending changes versus…

A: Government Spending is defined as the money that is spent by the government or the public sector of…

Q: Use the following information on economy X to answer the questions below. Consumption function: C =…

A: Given Consumption function: C = 250 + 0.8YInvestment spending: I = 150Government spending: G =…

Q: If the MPC is 0.4, the MPI is 0.2, and the government increases spending by $50 million, what will…

A: Marginal Propensity to Consume, is a measure in economics that indicates the proportion of an…

Q: What is the primary component(s) of GDP that Fiscal Policy is trying to effect?

A: Fiscal Policy refers to the change in government spending or taxes in order to promote economic…

Q: If tax multiplier is -3, then MPS is equal ?? Answer please

A: Tax multiplier shows how a variation in taxes impact the real GDP of the economy. It is the ratio of…

Q: Consider a hypothetical economy. Households spend $0.50 of each additional dollar they earn and save…

A: In a hypothetical economy, a household spends $0.50 of each additional dollar they earn and saves…

Q: Consider a hypothetical economy. Households spend $0.90 of each additional dollar they earn and save…

A: The total of net exports, government spending, investment spending, and consumption spending is…

Q: What is crowding out in an economy. What is the disadvantage of crowding out.

A: Crowding out is an economic concept that refers to a situation where increased government borrowing…

Q: Suppose that C = 100+ 0.75(Y -100), I= 50, G = 30, and X- M = 100, all in billions of dollars. What…

A: Gross domestic product is the final combination of goods and services in a country. GDP is an…

Q: If businesses and consumers become pessimistic, the government can attempt to reduce the impact on…

A: The performance and expansion of the economy are driven by aggregate demand or spending in Keynesian…

Q: Expenditures that would exist at a zero level of income are called induced expenditures:  True or…

A: There are two types of expenditure : Induced expenditure and Autonomous expenditure  Induced…

Q: What is the Laffer curve. Graphically show how to increase the tax revenue.

A: The economies around the world tend to operate with the motive of increasing their growth, and…

Q: Our economics have redone their calculations. They now estimate that citizensin our country have an…

A: MPC = 0.60 Decrease in GDP = 250

Q: In the country of Krugman, a business spent $100 million building a factory. GDP eventually…

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

Q: The following data are for the economy of Moksha. G=180 XN-50 0.25Y C=40+0.75Y I=70 a. Calculate…

A: Marginal propensity to consume is portion of additional income that household spends.Spending…