Please I need Help Suppose the price level is fixed, the MPC is .8, the GDP gap
ID: 1090771 • Letter: P
Question
Please I need Help
Suppose the price level is fixed, the MPC is .8, the GDP gap is a negative $200 billion. To achieve full-employment output (exactly), government should: increase government expenditures by $200 billion, reduce taxes by $200 billion. increase government expenditures by $40 billion, reduce taxes by $160 billion. Productivity measures: real output per unit of input. per unit production costs. the changes in real wealth caused by price level changes, the amount of capital goods used per worker. Refinancing the public debt means buying new bonds to retire maturing bonds, swapping bonds for other assets. paying off bonds at maturity. selling new bonds to retire maturing bonds.(Advanced analysis) Assume that the MPC is .8 in an economy that has an aggregate supply curve with a slope of 1. Also, suppose that the price level is flexible downward. A decrease in investment spending of $10 billion will shift the aggregate demand curve leftward by: $50 billion and decrease real GDP by $50 billion. $50 billion and decrease real GDP by $25 billion. $10 billion and decrease real GDP by $10 billion. $10 billion and decrease real GDP by $25 billion.Explanation / Answer
increease government expenditures by $40 billion
the changes in real wealth caused by price level changes
buying new bonds to retire maturing bonds
$50 billion and decrease real GDP by $25 billion