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In an open economy mpc is seven tenths and mpi is two tenths The economy is initially in equilibrium What is the effect on GDP of reducing net tax by 10 billion?
the multiplier is 1/(MPC+MPI) which in this case is 1/0.1 = 10
the net effect on GDP is 10 billion * 10 = 100 billion.
this is under the assumption that government spending has not reduced by 10billion to cover the reduced revenue. If this occured the net change would be zero.
What else can I help you with?
Assume the US economy is in short-run equilibrium with a price level of 150 and output of 6 billion The money m What is the impact of the Federal Reserve's policy on the equilibrium interest rate?
It Falls
Equilibrium and economies scale in market economy?
Equilibrium and economies scale in market economy
What economy uses the equilibrium price?
a market economy
Why is equilibrium not possible in a dynamic economy?
Equilibrium is not possible in a dynamic economy because the economy is constantly changing and evolving. Factors such as technological advancements, shifts in consumer preferences, and changes in government policies can all impact the economy and prevent it from reaching a stable equilibrium. This constant state of flux makes it difficult for the economy to settle into a state of balance.
After the fall of the economy in 1929, what did classical economists believe to be the solution to the Great Depression?
wait for the economy to achieve equilibrium
Assume the US economy is in short-run equilibrium with a price level of 150 and output of 6 billion The money m What is the impact of the Federal Reserve's policy on the equilibrium interest rate?
It Falls
Equilibrium and economies scale in market economy?
Equilibrium and economies scale in market economy
What economy uses the equilibrium price?
a market economy
Why is equilibrium not possible in a dynamic economy?
Equilibrium is not possible in a dynamic economy because the economy is constantly changing and evolving. Factors such as technological advancements, shifts in consumer preferences, and changes in government policies can all impact the economy and prevent it from reaching a stable equilibrium. This constant state of flux makes it difficult for the economy to settle into a state of balance.
How will the government policy of increasing federal state or local taxes could eventually lower inflation?
if inflation is increasing that means the economy is over producing and that the economy has an inflationary gap which means the equilibrium GDP(where total spending is equal to total production) is greater then potential GDP(full employment GDP). Increasing taxes will reduce the disposable income that consumer have which will then reduce consumer expenditure(which is one of the components of GDP or aggregate demand). This will lower the equilibrium GDP to be the same as potential GDP and will lower the equilibrium for the supply and demand graph for the entire economy to a lower price level reducing price levels. Reducing government spending or decreasing transfer payments will have the same affect on the economy.
What has the author Masahiro Okuno written?
Masahiro Okuno has written: 'On the efficiency of competitive equilibrium in infinite horizon economy and money' -- subject(s): Equilibrium (Economics) 'On the efficiency of competitive equilibrium in infinite horizon economy and money' -- subject(s): Equilibrium (Economics)
When the leakages and injections of the economy are balanced it is called what?
equilibrium
What is the economy of Ghana?
In 2004 the economy in Ghana is 44.44 billion dollars.
If C is 100 Ig is 50 Xn is -10 and G is 30 what is the economy's equilibrium GDP?
If C is 100 Ig is 50 Xn is -10 and G is 30 what is the economy's equilibrium GDP?
After the fall of the economy in 1929, what did classical economists believe to be the solution to the Great Depression?
wait for the economy to achieve equilibrium
Is Mongolia a command economy or a market economy?
They are really rich and they have $9.8 billion dollars.
What happens on February 28?
Us rescues Mexico's economy with 20-billion aid program February 20, 1995 Us rescues Mexico's economy with 20-billion aid program February 20, 1995 Us rescues Mexico's economy with 20-billion aid program February 20, 1995 Us rescues Mexico's economy with 20-billion aid program February 20, 1995
