How changes in government expenditure and tax programs through the setting of the government's budget affect AE, AD and equilibrium GDP? Explain graphically.
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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 long—term impacts of such policies on the economy?2. How does the tax wedge influence potential GDP? please explainUse the table below to answer the following questions. Real Consumptio GDP n $300 310 320 330 340 350 360 $290 298 306 314 322 330 338 (a) What is the size of the multiplier in this economy? Now, calculate the multiplier when the MPS is .5, .25, .10. What is the relationship between MPS and the multiplier? (b) If taxes were zero, government purchases were $10, investments $6, and net exports were zero, what is the equilibrium GDP? (c) If taxes are $5, government purchases are $10, investment is $6, and net exports are zero, what is the equilibrium GDP? (d) Assume that investment, net exports, and taxes are zero. Government purchases are $30, and the full-employment GDP without inflation is $330. How much must government spending be reduced to eliminate the inflationary expenditure gap?
- “If taxes and government spending are increased by the same amount, there will be no effect on equilibrium GDP.” True or false? Explain and support your answer using a specific hypothetical example.O Macmillan Learning Complete the graphs by moving the labels for aggregate expenditures (AE), aggregate demand (AD), aggregate supply (AS), the price level (PL), the equilibrium price level (PLeq), real domestic output (GDP), and equilibrium real GDP (GDP eq) the the appropriate places. 45° PLeq GDP eq Answer Bank AE AS PL GDP ADK The following equations describe consumption, investment, government spending, taxes, and net exports in the country of Economika. In Economika, equilibrium GDP is equal to $. (Round your asnwer the nearest dollar.) If real GDP in Economika is currently $4,850, which of the following is true? A. There will be an unplanned decrease in inventories, and real GDP will increase next period. OB. There will be an unplanned increase in inventories, and real GDP will increase next period. OC. There will be an unplanned decrease in inventories, and real GDP will decrease next period. O D. There will be an unplanned increase in inventories, and real GDP will decrease next period. OE. There will be no unplanned change in inventories, and real GDP will stay the same next period. C=200+0.80(Y-T) 1=400 G=350 T=350 X = 100
- Use the information in the following table to do exercises 8-15: silt 1 $20 $20 $4800 $20 $700xi $660 $20 Y $100 $300 $500 с $120 $300 G $30 $30 $30 $30 X $10 -$10 -$30 0-$50Use data below to answer the following questions:Consumption expenditures $300 billion, Government purchases $50 billionTaxes $40 billion, Investment $80 billion, Social Security payments $20 billionImports $30 billion, Exports $40 billiona) How much is GDP?b) How much are net exports?c) Social Security payments are government expenses. Should they be included in GDP? Explain.paper a pen and a calculator in order to solve the fo Problem 1 The various expenditure categories within the economy are: C = 600+ 0.8Yd | - 800 G = 600 NX = 0 T = 700 Refer to problem 1. Equilibrium Real GDP is *
- what ia aggregate spendingWhat is income-expenditure equilibrium? Derive aggregate demand curve from income expenditure equilibrium when the price level is not changed.The following table provides data for an economy in a certa e Consumpticn expenditure Tmports 1000 600 Government 700 purchases of goods and services Construction 500 of new homes and aparchenta Sales of 600 existing homen and apertmenta Exporta 500 Government 200 payments to retirees Household purchases of durable goods Change in inventory 300 100 A Calculate the value of investment spending B. What is the value of government spending C. What is the value of consumer spending D. What is the value of net exports spending E Calculate the value of GDP according to the spending approach
