Why was there disagreement about the effectiveness of the ARRA in reducing the impact of the 2008 Great Recession on output and employment in the United States? (1) The counterfactual, i.e., what would have happened to the economy if the ARRA was not implemented, cannot be observed. (II) Economists did not agree on the size of the expenditure multiplier. I and II. Neither I nor II. II only. I only. This is corrent

Why was there disagreement about the effectiveness of the ARRA in reducing the impact of the 2008 Great Recession on output and employment in the United States? (1) The counterfactual, i.e., what would have happened to the economy if the ARRA was not implemented, cannot be observed. (II) Economists did not agree on the size of the expenditure multiplier. I and II. Neither I nor II. II only. I only. This is corrent

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 5.11P

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4. The country of Merryville has an unemployment rate that is greater than the natural rate of unemployment.The government of Merryville increases spending on goods and services by $200 billion, which is financed by borrowing. If the marginal propensity to consume in Merryville is 0.75:i. Calculate the multiplierii. What is the maximum possible change in real gross domestic product (GDP) that could result from the $200 billion increase in government spending?
5. If an economy has a recessionary expenditure gap, the government could attempt to bring the economy back toward the full-employment level of GDP by taxes or government expenditures.
2. In macroeconomic theory, total or aggregate spending is denoted by A and total or aggregateproduction of income by Y. Which one of the following statements is incorrect? A When A is greater than Y, there is disequilibrium and Y will tend to increase.B When A is equal to Y, there is equilibrium and Y will remain unchanged.C When A is less than Y, there is disequilibrium and Y will decrease.D When A is greater than Y, there is disequilibrium and A will decrease.
8 Explain how automatic stabilisers can slow down a recession. Explain two (2) fiscal measures the federal government of Australia introduced in the 2021/2022 federal budget to reduce unemployment.
4. Suppose an economy had aggregate demand components with the following relationships: Consumption Spending, C=195+0.80° (DY) Investment Spending, I-25 +0.10°Y Government Spending, G-6+0.15*Y Net Export Spending, X-14-0.05*Y Tax Collections, Tx = -20+0.25*Y a. What is the equilibrium income for this economy (Show your work)? b. At the equilibrium income, what is the size of the government surplus (or deficit)? den Cal Page 3 601 c. If the Government decided to Increase G spending by 15, what would be the new equilibrium income for this economy (Show your work)? d. If instead the Government decided to Reduce Tx (taxes) by 6, what would be the new equilibrium income for this economy (Show your work)? yanoM e. If instead the Government decided to Increase G spending and Increase Tx (taxes) both by 30, what would be the new equilibrium income for this economy (Show your work)?
can you tell me which questions i've gotten wrong? This is a practice quiz that doesnt tell you the correct answers at the end. thanks 1- An increase in business investment spending has the same effect on the level of ad as an increase in the same amount of government spending. -true 2- If the government increased taxes by $10 at the same time it increased spending by $10 there would be no effect on the level of AD. 3- If social security payments to retirees increase, AD will increase and raise Y*. -true 4- Tax cuts in the classical range of the AS will stimulate output and unemployment -false 5- Increasing welfare payments by borrowing money to do so will increase AD- true 6- if the mpc increases, the multiplier decreases- false 7- if the mps increases the multiplier decreases -true 8- part of the cost of growing government budget deficits is and “opportunity cost” of what else could have been done with the money, particularly if the borrowing is used to increase consumption spending.…
3. Suppose an economy had aggregate demand components with the following relationships: Consumption Spending, C-140 +0.60*(DY) Investment Spending, I-25 +0.15"Y Government Spending, G-0 Net Export Spending, X=0 Tax Collections, Tx = 0 a. What is the equilibrium income for this economy (Show your work)? b. If the Government decided to Increase G spending by 6, what would be the new equilibrium income for this economy (Show your work)? Page 2 bed tooing c. If instead the Government decided to Reduce Tx (taxes) by 10 (i.e., send checks to people), what would be the new equilibrium income for this economy (Show your work)? d. If instead the Government decided to Increase G spending and Increase Tx (taxes) by 20, what would be the new equilibrium income for this economy (Show your work)?
2. Consider an economy where aggregate demand AD consists of aggregate con- 1000 and government = sumption C 10+ 0.8Y, aggregate investment I spending G = 800. (a) = (c) (d) What is aggregate demand if aggregate income/output is 10,000? Why is the economy not in equilibrium in that state? Calculate the goods market equilibrium for this economy. (b) Assume that the government increases spending by 20%. Calculate the new goods market equilibrium. What is the multiplier for the change in government spending? Assume now that the country starts trading globally and has Exports and Imports. Assume that imports are given by Im = n Y, with n being the marginal propensity to import. (e) Explain why - with exports and imports - a increase in government spending (e.g., 20%) results in a smaller change in aggregate demand/income in equilibrium than without exports and imports. (You do not have to calculate the new equilibrium.)
4. The foreign sector is added to the Keynesian national income model and there is a positive marginal propensity to import. X is the export and Z (in capital letter) is the import and C (in capital letter) is the consumption. Y = C+1+G+ (X – Z) C = c+ bY Z = z + mY Find: (i) The equilibrium level of income, consumption and import (ii) Specify the ranges of b and m and give the economics interpretations (iii) Identify the endogenous and exogenous variables from the model
Figure 3-3 45° Planned Expenditure 200 + 0.75Y 45 Income (Y) In the figure above: a. Find the equilibrium GDP. What happens to the left of that equilibrium? What happens to the right? b. When income is $1,000, what is the unplanned inventory? c. What is the GDP multiplier? d. What is the tax multiplier? e. How much should government expenditures increase if the government wants to increase GDP from the equilibrium level found at point a) to 1,000? f. How much should taxes decrease if the government wants to increase GDP from the equilibrium level found at point a) to 1,000? Planned Expenditure
PAE Y* PAE PAE 6,000 75Y PAE 6,000 75Y PAE 4,000 75Y 6,000 5.000 4,000 16 20 Frank Chapter 21
QUESTION 3 Give a hypothetical numerical example to show the relationship between the marginal propensity to consume (MPC) and the multiplier (m)? a. b. Considering both the simple Keynesian and the aggregate demand-supply frameworks, if households as a group experience a decrease in wealth at a given price level, what happen to Total Expenditure (TE), Aggreggate Demand (AD) and Real GDP. Illustrate and explain the change using a suitable graph.