11Econ 201Extra CreditPriceLeveLRASSRAS2752652552451.ADfollowing:4 6 8 10 14 18 Real GDP (millions)Use the graph below to answer thea. How large is the output gap? What type of gap is this?b. If the MPS is 0.25, find the spending multiplier. 4If prices were completely fixed, how much spending would be necessary to return theeconomy to full employment?d. Find the short run equilibrium real GDP and equilibrium price level if we increaseaggregate demand by the amount from (c).f.Find the change in spending necessary to return the economy to full employment withincreasing prices.Find the short run equilibrium real GDP and equilibrium price level if we increaseaggregate demand by the amount from (e).

a. To determine the output gap, you need to compare the actual level of output (real GDP) with the…

Answered: 11 Econ 201 Extra Credit Price Leve…

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 2TY

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Figure 8-23. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. 6 on4m21 3 Tax Revenue B Tax Size Refer to Figure 8-23. If the economy is at point A on the curve, then a small increase in the tax rate will O increase the deadweight loss of the tax and increase tax revenue. O increase the deadweight loss of the tax and decrease tax revenue. decrease the deadweight loss of the tax and increase tax revenue. O decrease the deadweight loss of the tax and decrease tax revenue.
J 7 What curve is meant to impacted by fiscal policy? What direction do policy makers hope to shift the curve?
15. If consumers in a country spend 3/4 of their disposable income. If their governmentincreases its spending by 75 trillion and in order to maintain a balanced budgetsimultaneously increases taxes by 75 trillion. Calculate the effect of the 75 trillion change ingovernment spending and 75 trillion change in taxes on the country’s aggregate demand.
3. 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 1
The cost of rebuilding the Philippines after typhoon Haiyan could reach USD 5.8bn”, a senior official has said. Assume the government of Australia Department of Foreign Affairs and Trade provided a grant of USD 5.8 billion. Also assume that despite the hardships the Philippine families experienced, 15% was the beneficiary savings from the Australian grant. Further, assume all other factors remain constant.a. Calculate the total effect of the spending multiplier of the Australian government grant on the Philippine economy GDP growth. b. Examine the overall multiplier effect of the USD5.8 billion grant on the Philippine economy. Answer asap n correctly with proper typed explanation
16. If consumers in a country spend 4/5 of their disposable income. If their governmentdecreases its spending by 55 trillion and in order to maintain a balanced budgetsimultaneously decreases taxes by 55 trillion. Calculate the effect of the 55 trillion change ingovernment spending and 55 trillion change in taxes on the country’s aggregate demand.
100 T. 80 G 60 40 O $ 100 200 300 400 500 600 700 800 900 GDP Refer to the diagram, in which Tis tax revenues and Gis government expenditures Al figures are in billons of doltars if the ful-employment ODP400 billion while the actual GDP is $200 billion: (Show your calcutations) a. What is the actual budget deficit? b. What is the cyclically adjusted budget deficit? c. The value of cyclically adjusted deficit identifies which type of discretionary fiscal policy? 20 G T.G ($)
Aggregate Expenditures 800 600 400 200 0 15 04 Income Refer to the above graph to answer this question. What is the value of the multiplier in this economy? 200 400 600 800 1000 167 A AE 02 O Cannot be determined.
The graph below shows real GDP levels over time. Answer the following questions based on this graph. Real GDP Business Cycle A Time a. At time T, what is the economy experiencing? O an economic expansion O full-employment output O an economic contraction b. In order to smooth out the business cycle, what type of fiscal policy should the government undertake? O expansionary fiscal policy O contractionary fiscal policy c. What type of actions might the government take? O a decrease in taxes and an increase in government purchases O an increase in taxes and a decrease in government purchases O a decrease in both taxes and government purchases. O an increase in both taxes and government purchases
Only typed answer and please don't use chatgpt Suppose the tax multiplier in an economy is -3. How will total spending (TS) change when taxes (T) increase by $300? Group of answer choices TS will decrease by $900 TS will decrease by $100 TS will increase by $900 TS will increase by $100
A fall in mps raises the GDP multiplier. O True O False
3 bok t ces The simple economy of Altria shown in the table below has no government or taxes and no international trade. Its investment is autonomous and its MPC is constant. a. Complete the table below. Remember to use a minus (-) sign to indicate negative values. AE Y S I 200 0 400 800 1,200 1,600 2,000 C 200 500 800 1100 1400 1700 0 -200 -100 100 200 300 b. The value of expenditures equilibrium is $ c. The value of the multiplier is

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