Question about tax multiplier and fed policy

Assignment Help Macroeconomics
Reference no: EM1369095

1 .Any point to the left and below the IS-curve means that :

there is excess demand for goods and services in the expenditure sector
there is excess supply of goods and services in the expenditure sector
the expenditure sector is in equilibrium but the money sector is not
there is excess demand in the money sector
there is excess supply of money in the money sector

2. Assume that the price level is flexible both upward and downward and that the Fed's policy is to keep the price level from either rising or falling. If aggregate supply increases in the economy, the Fed:

will have to increase interest rates to keep the price level from falling.
will have to reduce the money supply to keep the price level from rising.
will have to increase the money supply to keep the price level from falling.
can keep the price level stable without altering the money supply or interest rate.

3. Suppose that the economy starts at equilibrium and the mpc = 0.8. What would be the effect of a $500 increase in taxes once all the rounds of the multiplier process are complete?

An increase of $500 in taxes causes equilibrium output to decrease by 1000.
An increase of $500 in taxes causes equilibrium output to decrease by 2000.
An increase of $500 in taxes causes equilibrium output to increase by 2000.
An increase of $500 in taxes causes equilibrium output to decrease by 400.
An increase of $500 in taxes causes equilibrium output to increase by 400.

 

Reference no: EM1369095

Questions Cloud

Who are the stakeholders affected by the stores decisions : Who are the stakeholders affected by the stores' decisions? Do the stores, as businesses, have an obligation to the broader community to not hurt tourism and Is Neda placing her own personal ethics ahead of business ethics? Is there a difference? ..
How much time elapses between first and second splash : Heather and Jerry are standing on a bridge 45m above a river. Heather throws a rock straight down with a speed of 19m/s. Jerry, at exactly the same instant of time, throws a rock straight up with the same speed. Overlook air resistance. How much t..
Which of following statements represent short comings : Some Keynesian economists criticize official unemployment statistics for understating extent of joblessness in United States. Which of following statements represent short comings of official unemployment rate reported by Bureau of Labour Statisti..
Importance of peer and supervisor support : Importance of peer and supervisor support - Why are peer support and supervisor support important to the transfer process?
Question about tax multiplier and fed policy : Suppose that price level is flexible both upward and downward and that Fed's policy is to keep price level from either rising or falling.
What is maximum speed with the stone can be whirled : Density of Aluminium is 2.7g/cm3 or 2.7g/ml. How heavy (in grams) would be the coke can if instead of soda it would be filled in with aluminium? The volume of a soda can is 303 ml.
Board of directors duties and education program : find three topics or issues you believe should be part of a mandatory director education program for any incoming board member of a company?
Explain why chrysler decision might have been prompted : Explain why Chrysler's decision might have been prompted by movements in its wage costs or capital cost, or both.
Write program using ias instruction set : Form the array C such that C(I)=A(I)+B(I) for I=1,2,...,1000. using IAS instruction set, write down program for this problem with assembly.

Reviews

Write a Review

 

Macroeconomics Questions & Answers

  Production possibilities tables for germany and canada

Production Possibilities Tables for Germany and Canada (note that we are assuming that opportunity costs remain constant along the production possibilities frontier), and that each country produces only these two products).

  Illustrate what are the different types of exchange rate

Illustrate what are the different types of exchange rate, their advantages and disadvantages.

  Spell out the types of policies also practices companies

Spell out the types of policies also practices companies should develop if they want to keep their workers from unionizing.

  Describe several major antitrust cases in us

Describe several major antitrust cases in the United States. How do these laws affect (or affected) your work place or products used at your work place.

  Derivations for marginal utility

Derive an expression for the marginal utility of good 1, and for the marginal utility of good 2. Using these, solve for an expression describing the slope of an indifference curve: MRS(x1,x2).

  Explain the difference among a price floor price ceiling

Explain the difference among a price floor also a price ceiling. Provide a situation in which a price ceiling may be used.

  Elucidate the macroeconomic and microeconomic

Elucidate the macroeconomic and microeconomic concepts and how they relate to the management of a global organization.

  Suggestion to avoid bankruptcy of cigarette companies

US cigarette makers face enormous punitive damage penalties after losing a series of class action lawsuits-What action do you suppose the cigarette companies took to avoid bankruptcy?

  Decline of the personal saving rate

During the 1990s, age cohort that grew the most rapidly was the 45-54 cohort, which has highest saving rate. Yet during that same period,

  Describe how these technologies have changed the way

Describe how these technologies have changed the way accounting is performed at your organization or an organization of your choosing.

  Industry reinvests of earnings in the firm

If the rate of return earned on reinvested funds is 15 percent also the industry reinvests 40 percent of earnings in the firm, what must be the discount rate.

  Developed country known as ldc encourages direct foreign

Suppose that a less developed country known as LDC encourages direct foreign investment

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd