ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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![Your research into a nation has yielded the following Information:
Autonomous expenditure (A) = $300
Gross Investment (1) = $200
Government purchases (G) = $300
Net exports (NX) = $225
Taxes (T) = $300
MPC=0.75
Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.
a. Substitute the values above into the equation: AE=A+ [MPC × (Y-T)] +1+G+NX to determine the abbreviated equation for
aggregate expenditures (AE).
AE=
Y
b. Knowing that AE - Y at the equilibrium level of output, what is the equilibrium level of output for this nation?
Ye: $
c. What is the tax multiplier for this economy?
d. If taxes decrease by $40, from $300 to $260, what is the new equilibrium level of output?
Ye: $
e. With this new tax level of $260, the government will
O have enough tax revenue to pay for all its imports.
O collect more in taxes than it spends on government purchases.
O not tax businesses enough.
• spend more on government purchases than it collects in taxes.](https://content.bartleby.com/qna-images/question/74756c8e-157c-46ec-810b-1703ade875d4/75d29de1-06fe-4060-bdfe-4a6cbca3c0b3/ak31rar_processed.png)
Transcribed Image Text:Your research into a nation has yielded the following Information:
Autonomous expenditure (A) = $300
Gross Investment (1) = $200
Government purchases (G) = $300
Net exports (NX) = $225
Taxes (T) = $300
MPC=0.75
Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.
a. Substitute the values above into the equation: AE=A+ [MPC × (Y-T)] +1+G+NX to determine the abbreviated equation for
aggregate expenditures (AE).
AE=
Y
b. Knowing that AE - Y at the equilibrium level of output, what is the equilibrium level of output for this nation?
Ye: $
c. What is the tax multiplier for this economy?
d. If taxes decrease by $40, from $300 to $260, what is the new equilibrium level of output?
Ye: $
e. With this new tax level of $260, the government will
O have enough tax revenue to pay for all its imports.
O collect more in taxes than it spends on government purchases.
O not tax businesses enough.
• spend more on government purchases than it collects in taxes.
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