Exploring Macroeconomics
8th Edition
ISBN: 9781544337722
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 16, Problem 9P
To determine
To explain:
The reason behind a larger reduction in taxes is required to create similar increment in aggregate
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What is fiscal multiplier?
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suppose the government wishes to illuminate recessionary of a gdp of 100 billion in the MPC is .075. How much must the government increase in spending? Instead of increasing government spending by the amount you calculated what would be the effect of the government decreasing taxes by this amount explain?
Chapter 16 Solutions
Exploring Macroeconomics
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- The following graph shows the aggregate demand curve. Shift the aggregate demand curve on the graph to show the impact of a tax cut.arrow_forwardOur economics have redone their calculations. They now estimate that citizensin our country have an MPC of 0.60. We can fix the problem by decreasing GDP by 250. How much should we increase taxes?arrow_forwardWhat is the Effects of Fiscal Policy on Real GDP and the Price Level?arrow_forward
- Consumer saves 15% of additional income, spends 65% of income on goods and services and spends 20% on imports. What is the tax multiplier?arrow_forwardWhat is the aggregate expenditures function?arrow_forwardEconomist Arthur Laffer famously pointed out that, in some cases, income tax revenue can actually go up when tax rates go down. Why might this be the case?arrow_forward
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