MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Question
Chapter 11, Problem 6SQ
To determine
The change in the government spending required to bring back full employment.
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Students have asked these similar questions
In the Keynesian model, if the economy is experiencing a recessionary gap of $825 billion and the marginal propensity to save is .20, which one of the following combinations of spending and taxing changes should the government implement in order to eliminate the gap?
1. Increase government spending by $350 billion and decrease taxes by $350 billion.
2. Decrease government spending by $125 billion and increase taxes by $50 billion.
3. Decrease government spending by $250 billion and increase taxes by $150 billion.
4. Increase government spending by $600 billion and decrease taxes by $225 billion.
5. Increase government spending by $100 billion and decrease taxes by $100 billion.
6. Increase government spending by $125 billion and decrease taxes by $50 billion.
Macmillan Learning
What is the eventual effect on real GDP if the government
increases its purchases of goods and services by $60,000?
Assume the marginal propensity to consume (MPC) is 0.75.
What is the eventual effect on real GDP if the government,
instead of changing its spending, increases transfers by
$60,000? Assume the MPC has not changed.
An increase in government transfers or taxes, as opposed
to an increase in government purchases of goods and
services, will result in
O no change to real GDP.
O a smaller eventual effect on real GDP.
a larger eventual effect on real GDP.
O an identical eventual effect on real GDP.
The country is experiencing a serious rise in inflation which the government wants to control through fiscal policy. The Government will decrease spending by $20 million and increase taxes by $15 million. The marginal propensity to consume (MPC) is 0.80. What will be the effect on GDP and by how much?
A recessionary gap is how much GDP needs to increase from the current GDP to achieve full employment. Let's say that we are experiencing a recessionary gap of $36 million. Also assume that the MPC equals .80. The government decides to decrease taxes to close the recessionary gap. How much will be the tax decrease?
An inflationary gap is how much GDP needs to decrease from the current GDP to maintain employment while avoiding inflation. Let's say that we are experiencing an inflationary gap of $200 million. The government decides to increase taxes. Assume the MPC equals .80. How much will the tax increase be?
The government wants to achieve a balanced budget. It therefore increases…
Chapter 11 Solutions
MACROECONOMICS FOR TODAY
Ch. 11.3 - Prob. 1YTECh. 11 - Prob. 1SQPCh. 11 - Prob. 2SQPCh. 11 - Prob. 3SQPCh. 11 - Prob. 4SQPCh. 11 - Prob. 5SQPCh. 11 - Prob. 6SQPCh. 11 - Prob. 7SQPCh. 11 - Prob. 8SQPCh. 11 - Prob. 9SQP
Ch. 11 - Prob. 10SQPCh. 11 - Prob. 11SQPCh. 11 - Prob. 1SQCh. 11 - Prob. 2SQCh. 11 - Prob. 3SQCh. 11 - Prob. 4SQCh. 11 - Prob. 5SQCh. 11 - Prob. 6SQCh. 11 - Prob. 7SQCh. 11 - Prob. 8SQCh. 11 - Prob. 9SQCh. 11 - Prob. 10SQCh. 11 - Prob. 11SQCh. 11 - Prob. 12SQCh. 11 - Prob. 13SQCh. 11 - Prob. 14SQCh. 11 - Prob. 15SQCh. 11 - Prob. 16SQCh. 11 - Prob. 17SQCh. 11 - Prob. 18SQCh. 11 - Prob. 19SQCh. 11 - Prob. 20SQ
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