Aggregate demand AD AD, 45 Income Select the option that describes a possible scenario shown by the shift from ADo to AD, in Figure 3. Select one: O Rise in tax rate and rise in government spending. O Rise in tax rate and fall in government spending. O Fall in tax rate and fall in government spending. O Fall in tax rate and rise in government spending.

Aggregate demand AD AD, 45 Income Select the option that describes a possible scenario shown by the shift from ADo to AD, in Figure 3. Select one: O Rise in tax rate and rise in government spending. O Rise in tax rate and fall in government spending. O Fall in tax rate and fall in government spending. O Fall in tax rate and rise in government spending.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 2TY

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We found that for every $1 increase in G there is a multiplied impact on output with, in the most 1 basic model, a multiplier of A study by economists at the New York Fed conducted 1- MPC during the COVID-19 recession found that "as of the end of June 2020, a relatively small share of stimulus payments-ljust] 29 percent-was used for consumption." What is the G multiplier based on that estimated MPC and the formula from the basic model?
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QUESTION 6 In the diagram below, what would happen if the government were to increase spending on goods and services? CWJ W O a. The line marked W would shift downwards and national income would move towards its equilibrium level O b. The line marked J would shift upwards and national income would move towards its equilibrium level O c. The line marked W would shift upwards and national income would move towards its equilibrium level O d. The line marked J would shift downwards and national income would move towards its equilibrium level
. Suppose the United States economy is repre- sented by the following equations: Z = C + I + G, C = 500 + 0.75YD, T = 600, I = 300, YD = Y − T , G = 2000 Given the above variables, calculate the equilibrium level of output. assume that government spending decreases from 2000 to 1900. What is the new equilibrium level of output? How much does income change as a result of this event? What is the multiplier for this economy?
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