Consider the country of Sealand. The government wants to raise GDP by $60. It is known that MPS = 0.10. Which of the following could help the government achieve its objective? A. Reduce taxes collected by $6. B. need more information. OC. An increase in government expenditure by $12. D. All of the other answers are incorrect OE. An increase in government expenditure by $6.
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- In the economy of Kwartengland, the following figures are given for economic activity which was undertaken in 2013. All the figures are million Ghana Cedis Consumption Expenditure = 1000 + 0.8 YD Investment Spending= 600 Government Expenditure = 2450 Personal Taxes= 100 Exports= 100 Imports= 150 1. Calculate the investment and tax multipliers 2. By how much should exports change if government wishes to increase real GDP by 1000?Potential GDP 450 C+l+G+X-IM) F T 4,000 5,000 6,000 Real GDP (billions of dollars per year) In Figure 11-1, the slope of the expenditures schedule is 0.75, and the govemment wishes to achieve full employment. It should cut spending by 1,000. increase spending by 250. cut taxes by 1,000. cut taxes by 250. increase spending by 1,000. Real ExpenditureIf MPC = 0.5, a simultaneous increase in both taxes and government spending of $20 will a. decrease GDP by $20 b. increase GDP by $20 c. decrease GDP by $40 d. increase GDP by $40
- Use the following equations for exercises 16–18. C= $100+.8Y I= $200 G= $250 X = $100.2YSuppose that the government allocates $1 billion for new roads. It also raises taxes by $1 billion to keep the deficit from growing. The absolute value of the government purchase multiplier is 3.33 and that of the tax multiplier is 2.33. What is the effect on equilibrium GDP? GDP does not change. ● GDP increases by $ 2.33 billion. GDP increases by $3.33 billion ⒸGDP increases by $1 billion.How do income taxes and taxes on consumption expenditure influence the tax wedge? An increase in income taxes _______ the tax wedge, and an increase in taxes on consumption expenditure _______ the tax wedge. A. increases; increases B. increases; does not change C. decreases; decreases D. does not change; increases
- 1. If imports are $2 trillion, exports are $1.9 trillion, consumption is $3.8 trillion, investment is $700 billion, and government spending is $1.1 trillion, how much is GDP? 2. If consumption is $2.5 trillion, investment is $900 billion, government spending is $700 billion, imports are $1.2 trillion and exports are $1.4 trillion, how much is GDP? Example: If GDP rises from $6 trillion in 1994 to $8 trillion in 1999 and the GDP deflator in 1999 is 110, find real GDP in 1999 and find the percentage increase in real GDP between 1994 and 1999. First, we are asked to find real GDP in 1999. To do this we divide the nominal GDP, which is $8 trillion ($8,000 billion), by the GDP deflator for 1999, which is 110. This then is multiplied by 100. Real GDP in 1999 is $7,273 billion or $7.2 trillion. To find the percent change you must find the difference of real GDP between 1999 and 1994. Change in GDP = 7,232 – 6,000 = 1,232 You then take this difference and divide it by GDP in…The government of Osiris believes in balancing its budget over a seven-year cycle. Over the first six years, it has maintained its spending at $200 billion and its MTR at 0.25. (There are no autonomous taxes in Osiris). Column 2 of the table below shows the level of GDP in each of the first six years in the cycle. a. Complete the table below. Round your answers to nearest whole number. (4) (1) Year (2) GDP (3) Tax Revenue Government (5) Deficit/Surplus Spending ($billion) ($ billion) ($billion) 1 800 200 2 760 200 740 200 4 825 200 820 200 825 200 Suppose that the estimated level of GDP in Year 7 is projected to be $800. b. What level of government spending (assuming no change in the tax rate) for the government of Osiris to end the seven-year cycle with its budgetary goal on target? Government spending would have to be $ c. Alternatively, what should the new tax rate be (assuming no change in government spending) for the government of Ran to end the seven-year cycle with its budgetary…MPC is 0.60. To increase GDP by $360, how much should we decrease taxes?
- 1. If imports are $2 trillion, exports are $1.9 trillion, consumption is $3.8 trillion, investment is $700 billion, and government spending is $1.1 trillion, how much is GDP? 2. If consumption is $2.5 trillion, investment is $900 billion, government spending is $700 billion, imports are $1.2 trillion and exports are $1.4 trillion, how much is GDP?MPC is 0.875. When tax increases by $1, GDP will decrease by $8. O by $1, GDP will decrease by $7. by $1, GDP will increase by $8. by $1, GDP will increase by $7.If the government wants to expand aggregatedemand, it can _________ government purchases or_________ taxes.a. increase; increaseb. increase; decreasec. decrease; increased. decrease; decrease