Question 1

Determine the impact of an increase in government spending of $5 billion when the MPC is .8. Determine the impact of a decrease in government spending of $2.5 billion when the MPS is 1/3.

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Question 2

-Given the above model for the Falkland Island economy calculate the level of savings when the economy is in equilibrium.

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-Given the above model for the Falkland...

Question 3

How do the values of the tax multiplier and the government spending multiplier change as the MPC increases? Explain why the multipliers change. If the MPC were 0, what would the government spending and tax multipliers equal? If the MPC were 1, what would the government spending and tax multipliers equal?

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Question 4

The MPC in Montavada is .75.
(a) If taxes were reduced by $1,000 in Montavada, by how much would equilibrium output change?
(b) If government spending were increased by $1,000 in Montavada, by how much would equilibrium output change?
(c) Explain why a tax cut of $1,000 would have less effect on the economy of Montavada than an increase in government spending of $1,000.

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(a) If...

Question 5

Assume that you know that the tax multiplier for the economy is -4. From this information calculate the value of the MPC and MPS.

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Question 6

-If the aggregate consumption function is C = 100 +.8Yd what is the level of consumption if income is $2000 and net taxes are $200. Show all work.

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-If the aggregate consumption function is C...

Question 7

Identify the broad contrasting views regarding the role of government within the macroeconomy.

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Question 8

Explain what would be the impact of a decrease in lump-sum taxes on the slope of the consumption function.

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Question 9

Explain the case where unplanned inventories increase.

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Question 10

Determine the net impact upon the nation's economy that results from equal increases in spending and taxes of $10 billion when the MPC is .8.

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Question 11

Determine the net impact upon the nation's economy that results from equal decreases in spending and taxes of $5 billion when the MPC is .75.

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Question 12

Determine the impact of an increase in government spending of $10 billion when the MPC is .8. Determine the impact of a decrease in government spending of $5 billion when the MPS is .25.

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Question 13

Explain why saving plus taxes must equal investment plus government spending in equilibrium.

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Question 14

Explain why the government spending multiplier is different from the tax multiplier.

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Question 15

Assume that you know that the government multiplier for the economy is 3. From this information calculate the tax multiplier.

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Question 16

Determine the impact of an increase in taxes of $20 billion when the MPS is .25. Determine the impact of a decrease in taxes of $10 billion when the MPS is .2.

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Question 17

For the economy to be in equilibrium what must be the relationship between government spending, investment, savings, and tax revenue. (Hint: write out an equation)

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Question 18

Suppose policymakers decide to increase government spending by 100 and simultaneously increase taxes by 100. Explain what effect this simultaneous increase in G and increase in T will have on the economy and on the budget deficit.

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Question 19

Discuss an important difference between the spending and tax multipliers.

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Question 20

-If the aggregate consumption function is C = 100 +.9Yd what is the level of consumption if income is $3000 and net taxes are $100. Show all work.

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-If the aggregate consumption function is C...

Quiz 9: The Government and Fiscal Policy

Determine the impact of an increase in government spending of $5 billion when the MPC is .8. Determine the impact of a decrease in government spending of $2.5 billion when the MPS is 1/3.

-Given the above model for the Falkland Island economy calculate the level of savings when the economy is in equilibrium.

Assume that you know that the tax multiplier for the economy is -4. From this information calculate the value of the MPC and MPS.

-If the aggregate consumption function is C = 100 +.8Yd what is the level of consumption if income is $2000 and net taxes are $200. Show all work.

Identify the broad contrasting views regarding the role of government within the macroeconomy.

Explain what would be the impact of a decrease in lump-sum taxes on the slope of the consumption function.

Explain the case where unplanned inventories increase.

Determine the net impact upon the nation's economy that results from equal increases in spending and taxes of $10 billion when the MPC is .8.

Determine the net impact upon the nation's economy that results from equal decreases in spending and taxes of $5 billion when the MPC is .75.

Determine the impact of an increase in government spending of $10 billion when the MPC is .8. Determine the impact of a decrease in government spending of $5 billion when the MPS is .25.

Explain why saving plus taxes must equal investment plus government spending in equilibrium.

Explain why the government spending multiplier is different from the tax multiplier.

Assume that you know that the government multiplier for the economy is 3. From this information calculate the tax multiplier.

Determine the impact of an increase in taxes of $20 billion when the MPS is .25. Determine the impact of a decrease in taxes of $10 billion when the MPS is .2.

For the economy to be in equilibrium what must be the relationship between government spending, investment, savings, and tax revenue. (Hint: write out an equation)

Suppose policymakers decide to increase government spending by 100 and simultaneously increase taxes by 100. Explain what effect this simultaneous increase in G and increase in T will have on the economy and on the budget deficit.

Discuss an important difference between the spending and tax multipliers.

-If the aggregate consumption function is C = 100 +.9Yd what is the level of consumption if income is $3000 and net taxes are $100. Show all work.