Reference no: EM13893228
The Multiplier Effect and Possible Scenarios
Suppose Congress and the president decide that the best method to stimulate the economy is to cut taxes. The total amount of tax cuts approved is $300 billion and the current MPC is .80. Determine the initial fiscal stimulus and the cumulative fiscal stimulus for the tax cuts.
Inflation is a growing concern and the Federal Reserve has been unable to curtail consumer spending. Congress and the president decide to cut government spending by $100 billion and the current MPC is .90. Determine the initial fiscal restraint (spending reduction) and the cumulative fiscal restraint.
The economy is slowly entering a recession and there is general agreement that the federal government should stimulate the economy. An increase in government spending is approved in the amount of $200 billion. If the MPC is equal to .75, determine the initial fiscal stimulus and cumulative fiscal stimulus.
Due to inflationary pressures, the federal government decides to cut spending on transfer payment programs by $200 billion. The MPC is currently .80. Determine the amount of the initial fiscal restraint and the cumulative fiscal restraint.
Suppose the federal government wishes to close a recessionary GDP gap of $200 billion using tax cuts. If the MPC = .90, what is the amount of tax cuts necessary to close the gap?
The federal government is concerned about an inflationary GDP gap of $100 billion. A decision is made to reduce government spending to close the gap. By how much does the federal government need to reduce spending to close the inflationary GDP gap of $100 billion? The MPC = .90.
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Concerned about inter-generational equity problems
: The Australian government is concerned about inter-generational equity problems. Key problems arise from a larger number of older retired people being supported by a smaller workforce of young people, and from ever increasing budget deficits to be pa..
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Act on their assumptions regarding human nature
: Is elitism or pluralism more persuasive in explaining the behavior of political actors, individuals, and groups of individuals when they interact with government? What core assumption about human beings do both philosophies make to drive their assump..
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Which they diverted from-expanded upon-rejected
: Indicate two ways in which the framers of the United States Constitution were directly influenced by the thought of John Locke. Indicate one way in which they diverted from, expanded upon, rejected, or otherwise revised Locke's thinking.
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Inflation is forecasted to remain consistent with its target
: Inflation is forecasted to remain consistent with its target over the next 1-2 years. Inflation arises when:
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Initial fiscal stimulus and cumulative fiscal stimulus
: Suppose Congress and the president decide that the best method to stimulate the economy is to cut taxes. The total amount of tax cuts approved is $300 billion and the current MPC is .80. Determine the initial fiscal stimulus and the cumulative fiscal..
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Represent the monopolistic competition market structure
: A price discriminating firm will charge the lowest price when the price elasticity of demand is. Which of the following industries is most likely to represent the monopolistic competition market structure? In the Kinked Demand curve model, price ten..
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How do oligopolies influence market inefficiencies
: How do oligopolies influence market inefficiencies? a. the industry produces less output b. deadweight loss for society is increased c. prices for those goods are artificially high d. the industry makes higher profits
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Acts as representing either saving or investment
: Identify each of the following acts as representing either saving or investment.
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Stabilize the different stages of the business cycle
: Evaluate the fundamental arguments between Keynesians and Monetarists concerning the level of government involvement in our economy to minimize the impact and stabilize the different stages of the business cycle.
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