Suppose the government enacts a stimulus program composed of $400 billion of new government spending and...

Suppose the government enacts a stimulus program composed of $400 billion of new government spending and $200 billion of tax cuts for an economy currently producing a GDP of ?$14,000 billion. If all of the new spending occurs in the current year and the government expenditure multiplier is 1.8?, the expenditure portion of the stimulus package will add _______ percentage points of extra growth to the economy. ?(Round your response to two decimal places?.)

If the government taxation multiplier is 1.2?, the tax cut portion of the stimulus package will add _______ percentage points of extra growth to the economy.

?(Round your response to two decimal places?.)

As a result of the stimulus? program, the? economy's GDP was increased by ______percentage points over its value without the program.

?(Round your response to two decimal places?.)

If the? economy's actual growth was 33 ?percent, then without the stimulus? package, growth would have been ______percentage points.

?(Round your response to two decimal places and use a minus sign if necessary?.)

Expert Solution

Rahul Sunny answered 2 years ago

if government spending decreases by $10 billion and taxation decreases by $10 billion, there will be...

if government spending decreases by $10 billion and taxation decreases by $10 billion, there will be no change in equilibrium output and employment.

Suppose economists observe that an increase in government spending of $10 billion raises the total demand...

Suppose economists observe that an increase in government spending of $10 billion raises the total demand for goods and services by $30 billion. 1. If these economists ignore the possibility of crowding out, what would they estimate the marginal propensity to consume (MPC) to be? Round your answer to the nearest one hundredth. 2. Now suppose the economists allow for crowding out. Would their new estimate of the MPC be larger or smaller than their initial one?

suppose the government increases spending on highway construction by $5 billion. Which way does the AD...

suppose the government increases spending on highway construction by $5 billion. Which way does the AD curve shift? explain why the shift might be larger than $5 billion and why the shift might be smaller than $10 billion.

a) Real GDP is currently $4,500 billion, and potential GDP is $4,600 billion. If government spending...

a) Real GDP is currently $4,500 billion, and potential GDP is $4,600 billion. If government spending increases by $35 billion, what does the multiplier equal to? Show the effect the change will have on macroeconomic equilibrium. b) By how much does taxes have to change to create the same effect?

4. If a drop in government spending of $ 2 billion produces a drop in the...

4. If a drop in government spending of $ 2 billion produces a drop in the economy's real GDP of $ 10 billion, what is the value of that country's PMC? 5. When the price level is fixed and the investment increases by $ 100, the equilibrium expense increases by $ 500. a. Both the marginal propensity to consume and the multiplier is 0.2 b. The multiplier is 0.2. c. The multiplier is 5.0. d. The slope of the GA...

A government annually collects $520 billion in tax revenue and allocates $64 billion to education spending....

A government annually collects $520 billion in tax revenue and allocates $64 billion to education spending. What percentage of this government's budget is spent on education? A. 24.50% B. 12.31% C. 13.21% D. 30.13%

) Suppose that this year’s money supply is $400 billion, nominal GDP is $1200 billion (or...

) Suppose that this year’s money supply is $400 billion, nominal GDP is $1200 billion (or $1.2 trillion), and real GDP is $1000 billion. a. What is the price level? What is the velocity of money? b. Suppose that the velocity is constant and the economy’s output of goods and services rises by 5%. If the Fed keeps the money supply constant, what will happen to the price level? c. Suppose again that velocity is constant and the economy’s output...

Suppose that the government enacts a tax on retail sales of road salt, which homeowners and...

Suppose that the government enacts a tax on retail sales of road salt, which homeowners and businesses put on walkways and driveways. Assume that the supply of salt is perfectly elastic, due to the ease with which suppliers can stockpile the product. Before the tax, 1000 fifty-pound bags of road salt are sold at an equilibrium price of $6.5 per bag. After the tax, 775 bags are sold at $8 per bag. How much revenue does the tax generate for...

In 2018, Arendelle had GDP of $35.035 billion, which included consumption of $15.678 billion, government spending...

In 2018, Arendelle had GDP of $35.035 billion, which included consumption of $15.678 billion, government spending of $8.678 billion, investment of $9.023 billion and imports of $5.890 billion. What were Arendelle’s exports for 2018? (Just the number, don't write billion)

Suppose consumers' disposable income increased by $341 billion and their spending increased by $299 billion. What...

Suppose consumers' disposable income increased by $341 billion and their spending increased by $299 billion. What was the MPC? Suppose the government increases education spending by $30 billion. If the marginal propensity to consume is 0.90, how much will total spending increase?

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