HW_chap_16_answers_[1]

HW_chap_16_answers_[1] - For each scenario describe how...

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Econ 100 San Francisco State HW Chapter 16 You do not need to turn this problem in to me, but you can assume that there will be problems very similar to it in either a quiz or an exam. It would greatly benefit your to do it. 1) Lets say I discover a remote desert island and start the Republic or Kramerland. Finish the table below: Tax Revenues Government Outlays Budget Surplus (+) or deficit (-) Was there a deficit or surplus? Debt at the end of the year Year 1 $125 $33 125-33 = $92 Surplus -92 Year 2 $57 $63 57-63 = -$6 Deficit -92+6 = -86 Year 3 $27 $72 27-72 = -$45 Deficit -86 +45 = -41 Year 4 $14 $49 14-49 = -$35 Deficit -41+35 = -6 Year 5 $5 $42 5-42 = -$37 Deficit -6+37= 31 2) Assume that the MPC = .7 and that the multiplier = 2.2 (this is a world with taxes).
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Unformatted text preview: For each scenario describe how much the aggregate demand curve shifts and in what direction. a) The government spends $44 billion more on government expenditures $44 billion x 2.2 = $96.8 billion The AD curve shifts to the right by $96.8 billion b) The government spends $51 billion less on government expenditures -$51 billion x 2.2 = -$112.2 billion The AD curve shifts to the left by $112.2 billion c) The government spends $12 billion more on untaxable transfer payments .7 x $12 billion x 2.2 = $18.48 billion The AD curve shifts right by $18.48 billion d) The government spends $21 billion less on untaxable transfer payments .7 x -$21 billion x 2.2 = -$32.34 billion The AD curve shifts left by $32.34 billion...
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