4. What effect does a temporary increase in government purchases-for example, to fight a war-have on desired consumption and desired national saving, for a constant level of output? Assume that Ricardian equivalence holds (Complete the table below) Increase in government purchases: Desired Consumption, C Desired National Savings (1) (12) What is the effect on desired consumption and desired national saving of a lump-sum tax increase? Assume that Ricardian equivalence holds (Complete the table below) (1) O Increase (1) (2) O Increase (1) O Decrease (1) O Decrease (4) O Unchanged O Unchanged Desired Consumption, C Desired National Saving, S (3) O Increase (1) Decrease (1) O Unchanged (4) O Increase (T) O Decrease (1) O Unchanged A lump-sum tax increase

4. What effect does a temporary increase in government purchases-for example, to fight a war-have on desired consumption and desired national saving, for a constant level of output? Assume that Ricardian equivalence holds (Complete the table below) Increase in government purchases: Desired Consumption, C Desired National Savings (1) (12) What is the effect on desired consumption and desired national saving of a lump-sum tax increase? Assume that Ricardian equivalence holds (Complete the table below) (1) O Increase (1) (2) O Increase (1) O Decrease (1) O Decrease (4) O Unchanged O Unchanged Desired Consumption, C Desired National Saving, S (3) O Increase (1) Decrease (1) O Unchanged (4) O Increase (T) O Decrease (1) O Unchanged A lump-sum tax increase

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter36: Six Debates Over Macroeconomic Policy

Section: Chapter Questions

Problem 3PA

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2. The government decreases current taxes, while holding government spending in the present and the future constant. (a) Using diagrams, determine the equilibrium effects on consumption, investment, the real interest rate, aggregate output, employment, and the real wage. What is the multiplier, and how does it differ from the government expenditure multiplier? (b) Now suppose that there are credit market imperfections in the market for consumer credit, for example due to asymmetric information in the credit market. Repeat part (a) and explain any differences in your answers in parts (a) and (b). Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
14. Suppose that Korea has been in recession and many economists have concerns about the long-term recession. Therefore, the Bank of Korea and the government are preparing stimulus packages for the economy. (1) Using both AA and DD curves, describe the effect of the government’s temporarily expansionary fiscal policy on the change of equilibrium of national output and foreign exchange rate. (2) The Korean government decides to annually spend an extra budget on constructing and maintaining social infrastructure forever. Using both AA and DD curves, describe the impact of the government’s policy on the change of equilibrium of national output and foreign exchange rate.
--- WOOZ Planned expenditure function question with lump-sum tax Do all parts to the question (show your work) Assume in Fantasticland, MPC = 0.75, and autonomous consumption = $6000. %3D Planned investment = $2000, and planned government purchases = $5000. All Planned I and G are %3D %3D autonomous expenditures. Taxes ( T) is = $1000, and net exports = zero. a. Write out the consumption function b. What is induced consumption in this model C. Write out the planned expenditure function (show your work) d. Calculate current equilibrium real current GDP (income) (show your work) How much is the expenditure multiplier? е. f. How much is the net tax multiplier g. At the current level of equilibrium, the economy is experiencing a recessionary gap $4000. How much is the full employment GDP? h. How much will fantasticland change lump sum tax to close the recessionary gap? i. Write out the new planned expenditure function to reflect the change in lump sum taxes to close the recessionary gap of…
9.)In an economy with no government and no foreign sec- tors, autonomous consumer spending is $250 billion, planned investment spending is $350 billion, and the marginal propensity to consume is 2/3. a. Plot the aggregate consumption function and planned aggregate spending. b. What is unplanned inventory investment when real GDP equals $600 billion? c. What is Y*, income-expenditure equilibrium GDP?
1. Which of the situations is an example of the crowding-out effect on investment as it pertains to macroeconomics? - The government of Walla Walla spent $4.3 billion dollars and collected $2.2 billion dollars in tax revenue. - Candex, an eyeglass frame company, decides to cut the price on all of its frames to $10, which successfully drives out all other firms from the market. - The government deficit is at an all-time high in the United States. As such, people begin to save more money in fear that taxes will increase in the future. - Jack wants to borrow money to create a cowboy-themed inflatable bounce house for kids called "Wild Wild West." However, the government is running a deficit which has increased interest rates so much that Jack can no longer afford to borrow the money.
8. The income-expenditure model Consider a small economy that is closed to trade, so its net exports are equal to zero. Suppose that the economy has the following consumption function, where C is consumption, Y is real GDP, I is investment, G is government purchases, and T stands for net taxes: C = 15+0.75 x (Y-T) Suppose G = $90 billion, 1 = $60 billion, and T = $20 billion. Given the consumption function and the fact that for a closed economy total expenditure can be calculated as Y=C+I+G, the equilibrium output level is equal to 5 billion. Suppose the government purchases are increased by $50 billion. The new equilibrium level of output will be equal to Based on the effect of the change in government purchases on equilibrium output, you can tell that this economy's spending multiplier is equal to
5. Consider the following national-income model (with taxes ignored): Y - C(Y) – 1(i) – Go = 0 (0 < C' < 1; l'< 0) kY +L (i) – M0 = 0 (k = positive constant: L'< 0) (a) is the first equation in the nature of an equilibrium condition? (b) What is the total quantity demanded for money in this model? (c) Analyze the comparative statics of the model when money supply changes (monetary policy} and when government expenditure changes (fiscal policy).
7 Suppose a closed economy with no government spending which in equilibrium is producing an output and income of 1100. Suppose also that the marginal propensity to consume is 0.80, and that, if at full employment, the economy would produce an output and income of 3850 By how much would the government need to cut taxes (T) to bring the economy to full employment? (round your answer to the nearest whole value)
1-) Do you think that the marginal propensity to consume out of current income differs between tenured professors who have a high degree of job security and professional gamblers who never know when luck will strike?
n Suppose the consumption function is C-$700 billion+08Y and the government wants to stimulate the economy. By how much will aggregate demand at current prices shift initially before multiplier effects) with Instructions: Enter your responses as a whole number. a a $30 billion increase in government purchases? $ 30 billion b. a $30 billion tax cut? $ 24 billion ca $30 billion increase in income transfers? $ 24 billion What will the cumulative AD shift (after multiplier effects) be for d. the increased government spending? $ Mc Graw Hill e. the tax cut? $ billion billion f the increased transfers? $ billion e Wy Prev 1 of 5 Next > stv P4D 10:44 PM 6/18/2023
7. Which of the following is true about the annual budget prepared by the Government? * It is a part of the fiscal policy of the government O It is a part of the money-saving policy of the government O It is a part of the commercial policy of the government It is a part of the monetary policy of the government TOSHIBA
8. Given the following information: C = Ca + 0.8Yd Ip = 1900 - 40r G = 1800 NX = 700 - 0.14Y %D T= 200 + 0.20 Y Ca = 260 - 1Or Md/P = 0.25Y - 25r Ms/P = 2000 Find: 1. The equilibrium level of interest rate and output. 2. If Government expenditure increased by 100, find the new equilibrium level of interest rate and output