The CARES Act of 2020 increased disposable income by $600 billion. If consumers spent $430 billion of those income transfers immediately, Instructions: In part a, round your response to two decimal places. In part b. round your response to the nearest whole number. a. what was the MPC? b. how much stimulus would those income transfers ultimately provide?
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- U.S. Congress Gives Final Approval to $787 Billion Stimulus Feb. 13 (Bloomberg)-The U.S. Congress gave final approval to President Obama's S787 billion economic stimulus package in hopes of wresting the economy out of recession. Democrats predict the plan would save or create 3.5 million jobs... The stimulus plan would provide a half-trillion dollars for jobless benefits, renewable energy projects, highway construction, food stamps, broadband, Pell college tuition grants, high-speed rail projects, and scores of other programs. The plan would pump $185 billion into the economy this year and $399 billion next year, the agency said. -Brian Faler Source: Bloomberg.com, February 13, 2009. If consumers had an MPC of 0.90, by how much would AD have eventually increased with Obama's first-year spending stimulus, assuming the stimulus was entirely government spending? billionGive typing answer with explanation and conclusion Suppose that the typical Canadian spends 80 percent of their income. There is an income tax rate is 15% per period. If the government wanted to see the effect of a tax cut of $50 billion, what would be the tax multiplier that they would have to use.Part A Decide whether each of the following fiscal policies of the federal government is expansionary or contractionary. Write expansionary or contractionary, and explain the reasons for your choice. 1. The government cuts business and personal income taxes and increases its own spending. Expansionary. The decrease in personal income taxes increases disposable income and thus increases consumption spending. The business tax cut increases investment spending, and the increase in government spending increases government demand. 2. The government increases the personal income tax , Social Security tax and corporate income tax Government spending stays the same 3. Government spending goes up while taxes remain the same. 4. The government reduces the wages of its employees while raising taxes on consumers and businesses Other government spending remains the same
- 1. The Multiplier and Fiscal Policy: one of the programs to combat the economic effects of the recession and pandemic was the CARES Act passed in March 2020. One of the provisions of the CARES act was a relief check of $1200 per adult and $500 per dependent child. These payments were actually advance rebates on 2020 taxes and so the payments came from the IRS. This tax cut distributed about $300 billion to most, but not all of the U.S. population. Major exceptions included families with undocumented members (which invalidated the whole family, even those who were legal residents or U.S. citizens), dependent adults (which invalidated many college students as well as seniors living with their children). The program was phased out for individuals making more than $75,000 and married couples earning more than $150,000. Which of the following statements is correct about the multiplier effect of this part of the CARES act? Group of answer choices The multiplier effect would be greater than…QUESTION 3 3. If the AD shortfall is $800 billion and the MPC is 0.8, a) How large is the desired fiscal stimulus? b) How large an income tax cut is needed? c) Alternatively, how much more government spending would achieve the target? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). B I U S ParagraphText Problem 14-2 Question Help v Suppose that the Office of Management and Budget provides the accompanying estimates of federal budget receipts, federal budget spending, and GDP, all expressed in billions of dollars. Calculate the implied estimates of the federal budget deficit as a percentage of GDP for each year. (Enter each response as a percentage rounded to one decimal place. Do not include a plus or minus sign.) Federal Budget Receipts (2% growth) $2,329.8 Federal GDP Deficit as a % Budget Spending (5% growth) $2,682.6 Year (3% growth) $14,573.2 of GDP 2019 2020 2,376.4 2,816.7 15,010.4 % 2021 2,423.9 2,957.6 15.460.7 2022 2,472.4 3,105.4 15.924.5
- What is the main reason for employing expansionary fiscal policy during a recession?What is the main reason for employing contractionary fiscal policy in a time of strong economic growth?True or False: Federal spending has grown substantially in recent decades. By world standards, the U.S. government controls a relatively large share of the U.S. economy. A majority of the federal governments revenue Is collected through personal income taxes. Education spending is slightly larger at the federal level than at the state and local level. State and local government spending has not risen much in recent decades. Defense spending is higher now than ever. The share of the economy going to federal taxes has increased substantially over time. Foreign aid is a large portion, although less than half, of federal spending. Federal deficits have been very large for the last two decades. The accumulated federal debt as a share of GDP is near an all-time high.
- Why is government spending typically measured as a percentage of GDP rather than in nominal dollars?7. Examine whether the following items are built-in stabilizers or discretionary changes. (a)Unemployment benefits (b)Tax cuts (c)An increase in government spending on road work (d)Progressive tax systemQuestion 1 There is a recession gap of $150 billion in the economy. The MPS is 20%. What is the MPC [Select] and the Government Spending Multiplier [Select] Government need to [Select] much [Select] change taxes, would they [Select] the Tax multiplier [Select] [Select] ? Would the spending? By how ? If the Government decided to taxes? What is and by how much