Question 44 If a $35 billion increase in government expenditures increases equilibrium GDP by $175 billion, then: inflation is occurring. Ⓒthe MPS for this economy is 3. O the MPS for this economy is 2. the multiplier is 4.
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- A fall in mps raises the GDP multiplier. O True O FalsePotential 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 ExpenditureOnly typed answer and please don't use chatgpt Why will temporary tax increase be insignificant in reducing consumption expenditures by the amount expected a. Because viewed the tax increase as permanent. b. Because people choose to increase their savings. C become people viewed taco increases temporarily d. Consumption expenditure are not related to level of taxtation
- 2. How does the tax wedge influence potential GDP? please explain24. Which of the following is used as a remedial measure during a recession in an economy? a.Decrease taxes and increase government spending b.Increase taxes and government spending c.Decrease taxes and government spending d.Increase taxes and decrease government spendingAnswer exercises 11-14 on the basis of the following information. Assume that equilibrium real GDP is $800 billion, potential real GDP is $950 billion, the MPC is .80, and the MPI is .40.
- What would have a larger effect on aggregate demand: $150 billion of tax cuts or $150 billion of government expenditure? 1 try left Government expenditure would have a than the tax cuts because effect on aggregate demand A. smaller; tax cuts increase aggregate demand and government expenditure decreases aggregate supply OB. smaller; tax cuts increase aggregate demand and government expenditure decreases aggregate demand OC. larger; the tax cuts decrease aggregate expenditure while government expenditure increase aggregate demand D. larger; all government expenditure is spent while some of the tax cut is saved Search (3)4. The country of Merryville has an unemployment rate that is greater than the natural rate of unemployment.The government of Merryville increases spending on goods and services by $200 billion, which is financed by borrowing. If the marginal propensity to consume in Merryville is 0.75:i. Calculate the multiplierii. What is the maximum possible change in real gross domestic product (GDP) that could result from the $200 billion increase in government spending?Figure 8-24. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. 9 Tax Revenue a∞rontm ~ - X 8 7 6 5 4 3 2 1 A B Refer to Figure 8-24. Tax revenue would [I B. All of the above are correct. A. decrease if the economy began at point C and then the tax rate was increased. Answer Key:B Tax Size OC. decrease if the economy began at point B and then the tax rate was decreased. D. increase if the economy began at point F and then the tax rate was decreased.
- Figure 3-3 45° Planned Expenditure 200 + 0.75Y 45 Income (Y) In the figure above: a. Find the equilibrium GDP. What happens to the left of that equilibrium? What happens to the right? b. When income is $1,000, what is the unplanned inventory? c. What is the GDP multiplier? d. What is the tax multiplier? e. How much should government expenditures increase if the government wants to increase GDP from the equilibrium level found at point a) to 1,000? f. How much should taxes decrease if the government wants to increase GDP from the equilibrium level found at point a) to 1,000? Planned Expenditure3. Complete the following chart to calculate the spending and tax multipliers. Spending Multiplier Таx MPC MPS Multiplier 0.05 0.9 0.2 0.75 0.6 0.5 1Equal increases in government purchases and in net taxes have equal but opposite effects on the level of real GDP demanded. a. True b. False