Start Discovering Solved Questions and Your Course Assignments
TextBooks Included
Active Tutors
Asked Questions
Answered Questions
What is the simple spending multiplier? What is real GDP demanded? What would happen to real GDP demanded if government purchases increased to $40 billion?
This chapter assumes that investment is autonomous. What would happen to the size of the multiplier if investment increases as real GDP increases? Explain.
What is the sum of saving and net taxes when desired spending equals real GDP? Explain. Why the multiplier is related to the slope of the consumption function.
Simple Spending Multiplier Suppose that the MPC is 0.8 and that $14 trillion. By how much would GDP have to increase government purchases to achieve this goal?
How do events, such as the World Trade Center and Pentagon attacks described in the case study The Ripple Effects of 9/11 affect the aggregate expenditure line?
How does the multiplier interact with the price change to determine the new real GDP demanded?
What are three reasons given for a second round of federal spending to follow the 2009 stimulus plan?
Multipliers Suppose investment, in addition to having an autonomous component. How would GDP affect the size of the government purchase and net tax multipliers?
How could a tax cut achieve the same result? Would the tax cut have to be larger than the increase in government purchases? Why or why not?
Illustrate this on an AD-AS diagram, assuming that the government changes its purchases by exactly the amount necessary to close the gap.
Explain why it has this impact. What is the impact on the level of real GDP demanded, assuming the price level remains unchanged?
Calculate the change in the level of real GDP demanded for each of the following values of the MPC.
Assuming that this is true, what was the spending multiplier for the Cash for Clunkers program?
Provide examples of automatic stabilizers. What is the impact of automatic stabilizers on disposable income as the economy moves through the business cycle?
What did classical economists assume about the flexibility of prices, wages, and interest rates? What disagreements did Keynes have with classical economists?
Explain how the steepness of the short-run aggregate supply curve affects the government's ability to use fiscal policy to change real GDP.
Global Economic Watch Go to the Global Economic Crisis Resource Center. Compare and contrast the economic situations in the countries.
Read the article Inflation Should Be Lesser Worry for MPC. At the time of publication, what was the output gap in South Africa?
Question 1: Can you please explain the concepts of total utility, marginal utility, and utility maximization.
How do Unemployment compare to the explanations reviewed in the chapter case study?
What is the impact of shifts of the aggregate demand curve on potential output? Illustrate your answers with a diagram.
How has the increased use of computers affected U.S. productivity in recent years? Is contribution of computers expected to increase or decrease in near future?
Rules of the Game How do rules of the game affect productivity and growth? What types of rules should a government set to encourage growth?
Explain how output per capita can grow faster than labor productivity. Is it possible for labor productivity to grow faster than output per capita?
How can each type be illustrated with a per-worker production function? What determines the slope of the per-worker production function?