G 10 billion y g g m 1011 100 output expands by 100 g

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12. What is discretionary fiscal policy?
13. Discuss an important difference between the spending and tax multipliers.
14. Determine the net impact upon the nation's economy that results from equal increases in spending and taxes of $10 billion when the MPCis .8.
15. For the economy to be in equilibrium what must be the relationship between government spending, investment, savings, and tax revenue. (Hint: write out an equation)
16. Suppose that the MPS = .2 and the government is interested in raising the level of output in the economy by $100 billion. Calculate how much the government would have to spend to achieve this objective.
17. Assume that the government spending multiplier is equal to 4. Calculate the tax multiplier from this information.
18. Explain how some government tax revenue and spending can depend on the state of the economy.

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