User Account

All Pages

What is the initial effect of the tax reduction

Assignment Help Macroeconomics
Reference no: EM13319154

Suppose that the government reduces taxes by $20 billion, that there is no crowding out, and that the marginal propensity to consume is ¾.

a. What is the initial effect of the tax reduction on aggregate demand?

b. What addition effects follow this initial effect? What is the total effect of the tax cut on aggregate demand?

c. How does the total effect of this $20 billion tax cut compare to the total effect of a $20 billion increase in government purchases? Why?

d. Based on your answer to c, how could the government increase aggregate demand without changing the government’s budget deficit?

Reference no: EM13319154

Questions Cloud

Calculate what is the maximum water hammer pressure : A 0.5 m diameter concrete pipe (5.0 cm wall thickness with rigid pipe walls) carries water 600 m before discharging it into another reservoir. The surface elevation of the downstream resevoir is 55 m lower
Explain a voltaic cell consists of a standard h2 electrode : A voltaic cell consists of a standard H2 electrode in one half-cell and a Cu/Cu2+ half-cell. Calculate [Cu2+] when Ecell is 0.25 V
How many moisture of aggregate will be needed : Base course aggregate has a target dry density 119.7 lb/cu ft in place. it will be laid down and compacted in a rectangular street repair area of 2000 ft x 48 ft x 6 in the aggregate in the stockpile contains 3.1% moisture.
Explain the rate of the reaction when it reaches equilibrium : The rate constant of the reaction: a. Depends on the concentration of reactants b. Describes the rate of the reaction when it reaches equilibrium c. Is a thermodynamic constant that is always true for a given reaction d.
What is the initial effect of the tax reduction : How does the total effect of this $20 billion tax cut compare to the total effect of a $20 billion increase in government purchases? Why?
What power should contact lenses have to allow the person : A farsighted person has a near point of 60.0 cm for the left ye and a near point of 90.0 cm for the right eye. What power should contact lenses have to allow the person
Write mass balance equation for the antibiotic in symbols : The lake has a surface area of 2 acres and a mean depth of 6 feet. The flow into the river is 200 cubic feet per second (cfs). The antibiotic is degraded naturally in the lake with a first-order rate constant of 0.002 s
What are the power of the objective of the telescope : An astronomical telescope uses an eyepiece of power +100.0 D. what are the power of the objective and the magnifcation of the telescope
Evaluate the ph of the resulting solution : A student adds 33.0045g of potassium acetate to water and then adds 7.0 ml of 1.0 M HCl to this . the resulting solution is diluted to 250.0 ml calculate the PH of the resulting solution.

Reviews

Write a Review

Macroeconomics Questions & Answers

  Project the effect of national economic conditions

Project the effect of national economic conditions regarding trade and specialization business decisions.

  Explain the price elasticity of the aggregate industry

A firm in a competitive industry has marginal revenue which depends on the shape of the consumers' demand curve. In a competitive industry, the price elasticity of the aggregate industry supply curve will always be greater than or equal to the pric..

  Find the s.o.c. that maximizes profits

Given an imperfectly competitive firm in the output market where: P = P(Q) = price function where: P' 0, C'' > 0. (a) State the firm's profit function in terms of Q. (b) Find the F.O.C. that maximizes profits at Q*. (c) Interpret the F.O.C.

  Find the annual percentage rate

Find the solution using the mathematical equivalence formulae (such as F=P(1+i)n), substitute and solve (with your calculator - not with the tables) for the final answer? Solve by using the proper equivalence expressions (such as F = P(F/P, i, n))..

  Comment on the inflation picture for these years

Suppose a consumer buys 10 units of good X and 20 units of good Y every year. The following table lists the prices of goods X and Y in the years 2005-2007. Assume that these two goods constitute the typical market basket. Calculate the price indices ..

  What trends suggest they may be changing in the near future

Information Technology (IT) has been around for a long time but most health care organizations have not embraced information technology as much as most other industries. Discuss this issue as it relates to your organization. Given the material in..

  Describe your answer with economic principles

Are you agree or disagree- Describe your answer with economic principles and the reasons why.

  Explain why using hypothetical numbers to illustrate cases

Use a hypothetical example to illustrate whether you agree or disagree with the following statement, "Unemployment will go up more if the demand for labor is elastic, because the demand for labor will decrease more when you have elastic demand tha..

  Discuss price discrimination

Select 2 companies in the geographical location you live in and find out if they price discriminate. Why do these two companies price discriminate?

  Decide what sports were like nfl

Decide what sports were like NFL before the introduction of the salary cap?

  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).

  How would the market solve the problem

We often find that for major sporting events (playoffs, Super Bowl, etc.) the quantity of tickets demanded is greater than the quantity of tickets supplied. How would the market solve this problem

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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