Reference no: EM13888538
The following information is available for an economy: Consumption function: C = 220 + .8(Y-T) Investment: I = 400 Net Exports: NX = -140 Full Employment or Potential GDP = 3500 Currently, G = 500 and T =400. Note: G: Govt. Expenditure, T: Taxes, NX: Exports-Imports (in the data above, NX is negative).
(a) Calculate the current level of (equilibrium) GDP.
(b) Suppose that you work for the President’s Council of Economic Advisers (not a bad job if you can keep your name out of the press). How will you advise the administration to adjust the level of G in order to ensure that the economy operates at the full employment level? Show and explain your calculations. Note that you are only adjusting G.
(c) Now suppose that some of President’s close political advisers are urging him to adjust taxes but not spending. Assuming the same initial level of G (=500), how would you advise the administration to adjust taxes to reach potential GDP? Show and explain all your calculations.
(d) Some senators are urging the administration to design a deficit neutral fiscal package so that no fiscal policy measure affects the level of current budget deficit. In other words, any proposed increase in government spending must be paid for by an equal increase in taxes, or any tax cut must be accompanied by an equal (government) spending cut. Starting from the initial values of G (=500) and T (=400) how would you recommend to adjust both G and T so that the economy produces at the Potential GDP level but the size of the budget deficit remains unchanged? Show and explain all calculations
|
Competitive firms short-run production process
: If marginal cost is rising in a competitive firm's short-run production process and its average variable cost is falling as output is increased, then: A. average fixed cost is constant. B. marginal cost is below average variable cost. C. marginal cos..
|
|
Explain the enlightenment project
: Explain the Enlightenment project and discuss its role in the early development of social theory and knowledge.
|
|
Impact moral reasoning about the rights of the animals
: How does the concept of sentience impact moral reasoning about the rights of the animals? In response define sentience and give at least three examples of how this compact impacts ethical decisions about animals.
|
|
Draw the structure of the amino acid phenylalanine
: Draw the structure of the amino acid phenylalanine maintained in 1.0MHCl. Draw the molecule on the canvas by choosing buttons from the Tools (for bonds), Atoms, and Advanced Template toolbars, including charges where needed. The single bond is active..
|
|
Economy operates at the full employment level
: The following information is available for an economy: Consumption function: C = 220 + .8(Y-T) Investment: I = 400 Net Exports: NX = -140 Full Employment or Potential GDP = 3500 Currently, Calculate the current level of (equilibrium) GDP. Suppose tha..
|
|
Statement are true for perfectly competitive firm
: Which of the following statement(s) are true for a perfectly competitive firm that is seeking to maximize profits? The best production choice is at a quantity where price is equal to marginal cost. Price is equal to marginal revenue.
|
|
What you saw and how it contributes to gender socialization
: Discuss each observation including what you saw and how it contributes to gender socialization. Briefly discuss your reaction to each of these observations. These should be 3 different observations from different situations
|
|
What is the percent composition by mass of a solution
: What is the percent composition by mass of a solution made by dissolving 25.0g of sodium phosphate, Na3PO4, in 50.0g of water?
|
|
Why do you think jon is taking weeks to directly
: Why do you think Jon is taking weeks to directly communicate with stakeholders about the new system? Why do you think Jon and the system administrators decided to outsource the software for this system to an ERP company rather than developing it from..
|