Macroeconomics (7th Edition)
7th Edition
ISBN: 9780134738314
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 10, Problem 10.3.9PA
To determine
Recession.
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We know the following about a closed economy:
• Taxes: T = 20
. Government spending: G = 20 • Consumption: C = 10 + 0.6(Y - T)
where Y denotes the GDP. We also know that investment is constant but we ignore its value. One day, the government initiates a Keynesian stimulus to support the economy. It increases spending to 40. To avoid a big increase in public debt, it also increases taxes to 30.
What is the variation of GDP?
Select one:
a. It increases by 30
b. It increases by 35.
c. It increases by 40
d. It increases by 50
Suppose that Shen, an economist from a research facility in Washington, and Valerie, another economist from an
investigative reporting group, are both guests on a popular science podcast. The host of the podcast is facilitating their
debate over budget deficits. The following dialogue represents a portion of the transcript of their discussion: Valerie: Most people recognize that the budget deficit has been rising considerably over the last century. We need to find the best course of action to remedy this situation. Shen: I believe that a cut in income tax rates would boost economic growth and raise tax revenue enough to reduce budget deficits Valerie: I actually feel that raising the top income tax rate would reduce the budget deficit more effectively. The disagreement between these economists is most likely due to Despite their differences, with which proposition are two economists chosen at random most likely to agree? Business managers can raise profit more easily by reducing costs…
Some economists argue that policymakers can use monetary and fiscal policy to reduce the severity of economic fluctuations. In practice, however, there are obstacles to the use of such policies. What are the primary difficulties with using monetary and fiscal policy to stabilize the economy?
Chapter 10 Solutions
Macroeconomics (7th Edition)
Ch. 10 - Prob. 10.1.1RQCh. 10 - Prob. 10.1.2RQCh. 10 - Prob. 10.1.3RQCh. 10 - Prob. 10.1.4RQCh. 10 - Prob. 10.1.5PACh. 10 - Prob. 10.1.6PACh. 10 - Prob. 10.1.7PACh. 10 - Prob. 10.1.8PACh. 10 - Prob. 10.1.9PACh. 10 - Prob. 10.1.10PA
Ch. 10 - Prob. 10.1.11PACh. 10 - Prob. 10.1.12PACh. 10 - Prob. 10.1.13PACh. 10 - Prob. 10.1.14PACh. 10 - Prob. 10.2.1RQCh. 10 - Prob. 10.2.2RQCh. 10 - Prob. 10.2.3RQCh. 10 - Prob. 10.2.5PACh. 10 - Prob. 10.2.6PACh. 10 - Prob. 10.2.7PACh. 10 - Prob. 10.2.8PACh. 10 - Prob. 10.2.9PACh. 10 - Prob. 10.2.10PACh. 10 - Prob. 10.2.11PACh. 10 - Prob. 10.2.12PACh. 10 - Prob. 10.2.13PACh. 10 - Prob. 10.2.14PACh. 10 - Prob. 10.2.15PACh. 10 - Prob. 10.2.17PACh. 10 - Prob. 10.3.2RQCh. 10 - Prob. 10.3.3RQCh. 10 - Prob. 10.3.4PACh. 10 - Prob. 10.3.5PACh. 10 - Prob. 10.3.6PACh. 10 - Prob. 10.3.7PACh. 10 - Prob. 10.3.8PACh. 10 - Prob. 10.3.9PACh. 10 - Prob. 10.1RDECh. 10 - Prob. 10.2RDECh. 10 - Prob. 10.3RDECh. 10 - Prob. 10.2CTE
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