chapter_9.doc

# chapter_9.doc - 9.1 1 Ref ecti ve Thin king Wh at dete rmi...

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9.1 1

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Ref ecti ve Thin king Wh at dete rmi nes tax reve nue s? the inco me tax rate the rate of inte rest the mon ey sup ply in the eco nom y the rate of infla tion A nA Diff: 2 T o Gov ern men t in the Eco nom 2
Ref ecti ve Thin king 3

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Duri ng rece ssio ns, gov ern men t spe ndin g usu ally dec reas es bec aus e une mpl oym ent pay men ts dec reas e. incr eas es bec aus e une mpl oym ent pay men ts incr eas e. dec reas e bec aus e 4
Bill' s inco me is \$1,0 00 and his net taxe s are \$35 0. His disp osa ble inco me is \$1,3 50. \$65 0. - \$35 0. \$75 0. A nB Diff: 1 T o Gov ern men t in the Eco nom y S k Anal ytic A A Anal ytic Skill s 5

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en the gov ern men t sect or is incl ude d in the inco me - exp endi ture mod el, the equ atio n for agg reg ate inco me is Y = C + S - T . Y = C + I . Y = C + I + G . Y = C + S + I . A nC Diff: 1 T o Gov ern men 6
bud get def cit of \$10 0,00 0. bud get def cit of \$20 0,00 0. A nC Diff: 1 T o Gov ern men t in the Eco nom y S k Anal ytic A A Anal ytic Skill s 12) Afte r gov ern men t is add ed to the inco me - exp endi ture mod el, the for 7

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B Diff: 2 T o Gov ern men t in the Eco nom y S k Anal ytic A A Anal ytic Skill s 8
14) The agg reg ate con sum ptio n func tion is C = 800 + . 8 Yd . If inco me is \$2,0 00 and net taxe s are \$50 0, con sum ptio n equ als 2,00 0. 1,50 0. 2,15 0. 2,05 0. A nA Diff: 2 T o Gov ern men 9

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The agg reg ate con sum ptio n func tion is C = 1,00 0 + . 9 Yd . If inco me is \$3,6 00 and net taxe s are \$60 0, con sum ptio n equ als 3,40 0. 3,70 0. 2,40 0. 4,00 0. A nB Diff: 2 T o Gov ern men t in the 10
Ref er to the inf or ma tio n pro vid ed in Tab le 9.1 bel ow to ans wer the que stio ns tha t foll ow. Tab le 9.1 18) Ref er to Tabl e 9.1. At an out put leve l of \$1,2 00 11

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Eco nom y S k Anal ytic A A Anal ytic Skill s 19) Ref er to Tabl e 9.1. At an out put leve l of \$1,2 00 billi on, ther e is an unpl ann ed inve ntor y cha nge of posi tive \$10 billi on. zero . neg ativ e \$10 0 12
21) Ref er to Tabl e 9.1. At an out put leve l of \$2,0 00 billi on, ther e is an unpl ann ed inve ntor y cha nge of posi tive \$10 0 billi on. posi tive \$10 billi on. neg ativ e \$10 0 billi on. zero . A n 13

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Ref er to Tabl e 9.1. At an out put leve l of \$80 0 billi on, disp osa ble inco me equ als ____ ____ billi on. \$80 0 \$70 0 \$60 0 \$50 0 A nB Diff: 1 T o Gov ern men t in the Eco nom y S k Anal ytic A A Anal ytic 14
25) Ref er to Tabl e 9.1. At the equi libri um leve l of inco me, leak age s equ al ____ ____ billi on. \$0 \$10 0 \$20 0 \$30 0 A nD Diff: 3 T o Gov ern men t in the Eco nom y S k Anal ytic A A Anal ytic Skill 15

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Ref er to Tabl e 9.2. At an out put leve l of \$1,5 00 billi on, the leve l of agg reg ate exp endi ture is ____ ____ billi on. \$1,3 00 \$1,4 00 \$1,5 00 \$1,6 00 A nB Diff: 1 T o Gov ern men t in the Eco nom y S k 16
28) Ref er to Tabl e 9.2. At an out put leve l of \$1,5 00 billi on, ther e is an unpl ann ed inve ntor y dec reas e of \$20 0 billi on. cha nge of \$0. incr eas e of \$10 0 billi on. incr eas e of \$15 0 billi 17

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Ref er to Tabl e 9.2.
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