Business, 28.02.2021 01:20 3397md

"1.Suppose the government spends an additional $100 billion in expansionary fiscal policy. Assume the marginal propensity to consume is 0.75. Show the effect on GDP with: a. 5 rounds of changes in spending
b. A calculation with the fiscal policy multiplier
2. Suppose the government increases taxes by $80 billion in contractionary fiscal policy. The MPC is still 0.75. Show the effect on GDP with:
a. 5 rounds of changes in spending
b. A calculation with the fiscal policy multiplier
3. Assume the scenarios in questions 1 and 2 happen at the same time. This time, assume the MPC is 0.9. What is the effect on real GDP?
4 Suppose that real GDP increased by $100 billion after the government raised taxes and increased spending at the same time. If taxes were raised by $30 billion and the MPC is 0.8, how much was spending increased by?"?

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