Calculate the amount of desired fiscal stimulus

Assignment Help Business Economics

Reference no: EM131387444

a. Draw the appropriate graph assuming that the economy is operating below full employment. Assuming the aggregate demand shortfall is $1466B and MPC is .72, calculate the amount of desired fiscal stimulus.

b. Given the situation in a, if government spending increases by $570B, calculate the impact to aggregate demand. Illustrate this scenario on a separate graph from above. Is there a GDP gap? If so, what type?

c. Given the situation in a, calculate what would happen if the government cut taxes by $570B. Illustrate the affects on a separate graph. Is there a GDP gap? If so, what type?

d. Which type of government intervention (from scenarios B & C ABOVE) gets us closer to full employment output?

Reference no: EM131387444

Questions Cloud

Discuss about the post given below : Briefly provide the title and describe your 2 choices from "programs" or "practices" (provide web links to each article). Which one was rated "NO EFFECTS" and why?Which one was rated "EFFECTIVE" and why? What is your overall impression of the www.cri..

Determine the best course of action for a community hospital : Using the information below, develop a Linear Program to determine the best course of action for a community hospital. Using the results of the Linear Program prepare an executive summary 2-3 pages, outlining the best course of action and justifyi..

Consider an economy where negative supply shock happens : Consider an economy where a negative supply shock happens. The supply shock is not accommodated by the Fed. Which of the following will be true? None of the listed options is correct. The inflation rate will rise. Output will go higher than its poten..

What has been your average return and holding period return : The return pattern on your favorite stock has been 5%, 8%, -12%, 15%, 21% over the last five years. What has been your average return and holding period return over the last 5 years?

Calculate the amount of desired fiscal stimulus : Draw the appropriate graph assuming that the economy is operating below full employment. Assuming the aggregate demand shortfall is $1466B and MPC is .72, calculate the amount of desired fiscal stimulus.

Can the corporation recover from the fire insurance company : Thereafter, Peter B. Arson set fire to the building, and it was totally destroyed. Can the corporation recover from the fire insurance company on the $750,000 fire insurance policy? Why?

Describe the taylor rule-full-employment level : Describe the taylor rule. if the fed were the following rule, what would the nominal Fed funds rate be if inflation over the past year were 4% and output were 1% below its full-employment level? assume that the inflation target and equilibrium real i..

A certificate of authority from state m result : Riley fails to pay for the goods, and when Amalgamated Corporation sues Riley in a court of State M, Riley defends on the ground that Amalgamated Corporation does not possess a certificate of authority from State M. Result?

Price setting model of oligopolists selling differentiated : One problem with the Bertrand price setting model of oligopolists selling differentiated products is that the profit function is discontinuous. Consumers would generally prefer that strategic oligopolists engage in sequential as opposed to simultaneo..

User Account

All Pages