Question

Suppose that the government decide to reduce the lump-sum taxes. Diagram the effects this had on aggregate output, consumption, employment, and the real wage and explain your results. (Note that you should diagram the effects on a graph with the production possibilities frontier and indifference curve).

Please Include the diagram!

Thank you!

Answer #1

Q. Consider the possibility that government spending increases
productivity so that with lump sum taxes after an increase in
government spending the original equilibrium level of consumption
and leisure is still just affordable. How will an increase in
government spending affect consumption, hours worked, output and
welfare? What if the new PPF is beyond the original one at this
point?
***Please do not copy from the extising answers from chegg for
this question, those are not completelly correct. Thanks.***

Suppose the foreign government increases its Lump Sum Taxes.
Using appropriate diagrams for the foreign exchange markets of "e"
and "x" (1 diagram for each market) explain what happens to the
value of the dollar (and why) from this fiscal policy change.

Which of the following is graphed as a horizontal line across
levels of real GDP in the aggregate expenditures model?
the saving schedule
the investment schedule
the consumption schedule
the investment demand curve
The multiplier effect relates changes in
the price level to changes in real GDP.
the interest rate to changes in investment.
disposable income to changes in consumption.
spending to changes in real GDP.
The multiplier can be calculated by
dividing
one by one minus the marginal propensity...

Suppose the production function is Y=100(N-0.01N^2). And the
marginal product of labor is MPN=100-2N. The aggregate quantity of
labor supplied is NS=50+1.5w-Tr, where w is the real wage rate and
Tr = 20 is the lump-sum transfer that household received from the
government. The full-employment level of output is
less than or equal to 2,000
more than 2,000, but less than or equal to 2,500
more than 2,500, but less than or equal to 3,500
more than 3,500, but less...

1. In the short-run IS-LM model with income taxation, taxes are
given by ?=? +??. Suppose that MPC = 0.75 and the marginal tax rate
?=0.2. Then, when ? decreases by 1000, then for any given interest
rate, the IS curve shifts:
Select one:
a. to the left by 1000.
b. to the right by 3000.
c. to the right by 3750
d. to the right by 1875.
2.
Suppose that the adult population in an economy is 28 million,...

2. Include correctly labeled diagrams, if useful or required, in
explaining your answers. A correctly labeled diagram must have all
axes and curves clearly labeled and must show directional changes.
If the question prompts you to “Calculate,” you must show how you
arrived at your final answer.
The economy of Newland is in short-run macroeconomic
equilibrium. The current real output is $400 billion, and the full
employment output is $500 billion. The marginal propensity to
consume is 0.8.
(a) Is...

Explain whether each of the following events would increase,
decrease, or have no effect on the short-run aggregate demand
curve:
a. A decrease in the U.S. price level makes American goods more
attractive to foreign buyers.
b. Households decide to consume a larger share of their
income.
c. Worsening profit expectations cause firms to decrease their
expenditures on new machinery and equipment.
d. As the price level declines, the purchasing power of currency
increases, and thus Americans increase their purchases...

Consider a one-period closed economy, i.e. agents (consumers,
ﬁrms and government) live for one period, consumers supply labor
and demand consumption good, whereas their utility function is in
the form of log(C−χN1+ν/1+ν ) (GHH preference). Firms supply
consumption good and demand labor and their production function is
y = zN^1−α. The government ﬁnances an exogenous spending via
lump-sum taxes. Suppose there is a positive shock on χ which means
the consumers favor leisure (or dislike labor) by much more than...

13. Suppose there is an increase in government spending in a
closed economy. In medium-run such a fiscal policy will cause:
none of the other answers is correct.
ambiguous effects on the neutral real interest rate
the nominal wage to rise
no change in the neutral real interest rate
the neutral real interest rate to rise
14. Suppose the economy is initially in the steady state.
According to Solow model without technological progress, an
increase in the depreciation rate (δ)...

If autonomous consumption is $1000, the MPC = 0.75, net taxes =
$500, investment spending = $800, and govt purchases = $500, and NX
= $0, what is equilibrium GDP?
Question 1 options:
$1,800
$1,925
$2,566.70
$7,200
$7,700
Question 2 (1 point)
The focus of the short-run macro model is on the role of
Question 2 options:
spending in explaining economic fluctuations
labor in explaining economic fluctuations
financial markets in explaining economic fluctuations
output in explaining economic fluctuations
resources in...

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