Assume the current equilibrium level of income is $200 billion as compared to the full - employment income level of $240 billion. If the MPC is 0.625, what change in government spending is needed to achieve full employment? Multiple Choice An increase of $25 billion. A decrease of $12 billion. An increase of $15 billion. An increase of $10 billion.
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- The impact of an increase in government spending would be to a) increase the interest rate b) leave the interest rate unchanged c) decrease the interest rateWhich of the following is NOT counted in the "G" component of spending a. social security payments to retirees b. the federal government purchases three new military fighter planes c. the city government pays the salaries of teachers d. the state government spends $100 million building a new section of highwayIf MPC = .8, actual GDP = $5,000 and potential GDP = $4,900, there is a __________(recessionary / inflationary) gap of $_____ and a _________ (decrease / increase) in personaltaxes of $______ would eliminate the gap.
- If 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 $40When the price level increases, the effect of an increase in government GDP is 1 negative. understated. close to infinity overstated an accurate of the actual change in equilibrium income.C = 450 + 0.4Y I = 350G = 150X = 70Z = 35 + 0.1Y T = 0.15YYf = 1550Calculate the tax revenue to the government of this country when the economy (2) remains in equilibrium.Calculate what the new equilibrium income should be if the government of this (6) country decides to cancel all taxes, implying the tax rate would now be 0%.Before the government decreased the tax rate, how much of government spending was required to bring the economy to full employment?
- If a rise in government expenditure of $2 million led to a rise in GDP of $10million, calculate the rise in GDP resulting from a tax cut of $2 million. Group of answer choices $6 million. $8 million. $10 million. $12 million.The FICA (Federal Insurance Contribution Act) income cap is the point at which one’s income is no longer subject to the 6.2% social security tax that persons pay on their earnings. Under the current law, only the first $142,800 of earnings is taxed. After that, high earners no longer pay Social Security tax for the entire year. Presently the Nation's total personal income approaches $14 trillion. The Congressional Budget Office reports that 80% of all income earned in the Nation is earned above $142,800. 8A. What is meant by the term “Scrap the Cap.” 8B. If the Cap was “scrapped” and if 12.4 % of the income earned over $142,800 was taxed to fund Social Security, how much additional revenue would be generated annually for social security? 8C. Is Social Security really going bankrupt? Please do fast ASAP... fasta tax decrease will decrease consumption a tax increase will increase consumption consumption and after-tax income are unrelated consumption varies inversely with after-tax incomes consumption varies directly with after-tax incomes
- MPC = 5 a simultaneous decrease in both taxes and government spending of $40 will: A) increase GDP by $80 B) decrease GDP by $40 C) decrease GDP by $80 D) increase GDP by $40C = 450 + 0.4Y I = 350 G = 150 X = 70 Z = 35 + 0.1Y T = 0.15Y Yf = 1550 Calculate the tax revenue to the government of this country when the economy remains in equilibrium. Calculate what the new equilibrium income should be if the government of this country decides to cancel all taxes, implying the tax rate would now be 0%. Before the government decreased the tax rate, how much of government spending was required to bring the economy to full employment?If MPC = .5, a simultaneous increase in both taxes and worthless government spending of $20 will: decrease GDP by $20. decrease GDP by $40. increase GDP by $20. increase GDP by $40. Increase GDP by $60.