6. Multiple Choice Question.Which of the following arelikely the medium-run effects of a decrease in taxes (AT <0)?(Assume that the economy is initially at the natural level.)2A. u(t), P(↓), Y(-), I(†), (4)B. u(-), P(t), Y(-), (4), (†)C. u(4), P(t), Y(†), (4), (†)D. u(?), P(↓), Y(†), I(†), *(?)E. u(-), P(?), Y(-), I(?), (4)7. Multiple Choice Question.Under flexible exchangerates if there is simultaneously a tax decrease and a monetaryexpansion, we know with certainty that:A. the exchange rate would decrease (depreciation of the do-mestic currency).B. output will increase.C. the exchange rate would decrease (depreciation of the do-mestic currency) and output would decrease.D. None of the above.8. Multiple Choice Question.Which of the followingwould not be considered part of fixed investment spending(I)?A. A household buys a financial assets.B. A firm buys a new robot for its automobile assembly line.C. A firm builds a new factory.D. An accountant buys a newly built home for herself andher family.E. A firm buys new furniture.

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6. Multiple Chunce Question. Which of the following are likely the medium-run effects of a decrease in taxes (AT < 0)? (Assume that the economy is initially at the natural level.)2 A. u(t), P(4), Y(-), I(†), (4) B. u(-), P(t), Y(-), (4), (†) C. u(4), P(t), Y(†), I(↓). i(t) D. u(?), P(↓), Y(†), I(†), (?) E. u(-), P(?), Y(-), I(?), (4)

6. Multiple Chunce Question. Which of the following are likely the medium-run effects of a decrease in taxes (AT < 0)? (Assume that the economy is initially at the natural level.)2 A. u(t), P(4), Y(-), I(†), (4) B. u(-), P(t), Y(-), (4), (†) C. u(4), P(t), Y(†), I(↓). i(t) D. u(?), P(↓), Y(†), I(†), (?) E. u(-), P(?), Y(-), I(?), (4)

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter25: The Keynesian Perspective

Section: Chapter Questions

Problem 20CTQ: Suppose the economy is operating at potential GDP when It experiences an increase in export demand....

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1. The government imposes a per-unit tax of 4 sheqles on banana and demand for banana is elastic. Calculate the consumer and producer share of tax burden and explain it on the graph? 2. Explain the expansion path when it is an increasing return to scale using graph and numbers. What does this mean?
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3-Suppose the government creates an order of economists that limits the number of people who can become economists. This would entail (a) the disappearance of economic recessions. (b) a decrease in demand for economists. (c) increased demand for economists. (d) an increase in the salary of economists. 4-Let us consider a good whose market is in a situation of perfect competition. The demand curve for the good is decreasing, while the gold curve is increasing. If the introduction of a price cap by the government results in a fall in the market clearing price, then (a) there will be excess demand at the new market equilibrium. (b) there will be equality of supply and demand at the new market equilibrium (c) there will be an excess of the new market equilibrium. (d) There is not enough information to answer.
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Question 10: Assume an economy operates in the intermediate range of its aggregate supply curve. For each of the following changes in conditions, state the direction of the effect on: aggregate demand, aggregate supply; price level, real GDP. (a) An increase in government expenditure in infrastructure Click or tap here to enter text. (b) A severe recession occurs in a country which has been a major importer of the nation's exports. Click or tap here to enter text. (c) The federal government reduces business taxes Click or tap here to enter text.
Question 6: Assume an economy operates in the intermediate range of its aggregate supply curve. For each of the following changes in conditions, state the direction of the effect on: aggregate demand, aggregate supply, price level, real GDP. (a) A decrease in government expenditure in infrastructure Click or tap here to enter text. (b) A severe recession occurs in a country which has been a major importer of the nation's exports. Click or tap here to enter text. (c) The federal government increases business taxes Click or tap here to enter text. lity: Investigate END OF EXAMINATION
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