Exhibit 20-4 Macro AD/AS Model Price level (CPI) 0 4 8 increased by $1.6 million O decreased by $1.6 trillion O increased by $20 trillion O increased by $ 20 million LRAS AD₁ 12 Real GDP (trilions of dollars) SRAS 20 AD₂ As shown in Exhibit 20A-4, assume the marginal propensity to consume equals 0 50. Using discretionary fiscal policy, federal government spending in order to restore the economy from E 1 to full employment. should be

Exhibit 20-4 Macro AD/AS Model Price level (CPI) 0 4 8 increased by $1.6 million O decreased by $1.6 trillion O increased by $20 trillion O increased by $ 20 million LRAS AD₁ 12 Real GDP (trilions of dollars) SRAS 20 AD₂ As shown in Exhibit 20A-4, assume the marginal propensity to consume equals 0 50. Using discretionary fiscal policy, federal government spending in order to restore the economy from E 1 to full employment. should be

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 3TY

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Exercise D24 Compare two policies: a tax cut on income or an increase in government spending on roads and bridges. What are both the short-term and longâ€”term impacts of such policies on the economy?
uèstion 21 pounts The economy is in a recession. The government enacts a policy to increase the real GDP by $10 billion. The MPS is 0.2. Assuming that the agggregate supply curve is horizontal across the range of GDP being considered, by how much should the government change spending or taxes in order to achieve its objective? Show your calculations. e For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS Paragraph Arial 10pt A v x X, Re v 55 OWORDS POWERED 図田 lili 用

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Using the aggregate expenditures model, answer the questions below to show how government fiscal policy could eliminate either a recessionary expenditure gap or an inflationary expenditure gap. Full employment 6000 Tools 5000 Gap 54000 AE, 3000 $2000 1000 45° 1000 2000 3000 4000 5000 6000 Real GDP (billions of dollars) a. Given that full employment exists at $4,500 billion, does a recessionary gap or an inflationary gap exist? (Click to select) b. Identify this gap using the diagram above. Instructions: (1) Use the tool provided 'Gap' to show this expenditure gap. The tool will display a two- ended arrow. Drag one end of the arrow to the lowest value of the expenditure gap and drag the other end to the highest value of the gap. c. What is the dollar amount of the expenditure gap? | billion Aggregate expenditures (billions of dollars)
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Hi this question is for macroeconomics but on bartleby does not show any option for macroeconomics As a result of COVID-19, the Government of Canada has been actively using a discretionary fiscal stimulus policy. Using the Aggregate Supply – Aggregate Demand model, illustrate the intended impact of this policy on Aggregate Demand. Has the fiscal stimulus policy been effective? Why or why not? When the discretionary fiscal stimulus policy has ended, what actions with respect to the budget, will the government have to consider to address the debt level resulting from the discretionary fiscal stimulus policy?
Which of the following fiscal policies cause a decrease in aggregate expenditures? OA. An increase in transfer payments and an increase in government spending. PAn increase in transfer payments and a decrease in taxes. A decrease in taxes and an increase in government spending MAN increase in taxes and a decrease in covernmentspenong
explanation. Be sure to exp Assume the United States has been in another recession for the past 10 months. Unemployment is 10% and GDP has dropped $1.9 trillion from its previous peak of $ 20.8 trillion. The housing and heavy equipment industries have been hit the hardest. Inflation has been near the 2% target but has started to dip below. Also, the countries average MPC is 60. Determine the best fiscal policy/strategy to help the economy recover and explain why it is the best choice. Be sure to reference Aggregate Demand and Aggregate Supply and explain your specific tools in your answers. Calculations Explanation Graph (More space for the explanation on the back)
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