A sofa is on sale for $187.20, which is 26% of the regular price. what is the regular price?

A country is in the midst of a recession with real GDP estimated to be $4.5 billion below potential GDP. The government's policy

VARVARA [1.3K]

Answer:

a. The government needs to increase spending by $0.45 billion and decrease taxes by $0.5 billion.

b. The real GDP will fall short of potential GDP by $3.6 billion.

c. The real GDP will fall short of potential GDP by $4 billion.

d. If government overestimates MPC change in spending or taxes will be too small.

Explanation:

The GDP gap is $4.5 billion.

a. The marginal propensity to consume is 0.90.

Government spending multiplier

= $\frac{1}{1-MPC}$

= $\frac{1}{1-0.9}$

= 10

The government needs to increase spending by

= $\frac{GDP\ Gap}{Government\ spending\ multiplier}$

= $\frac{4.5}{10}$

= $0.45 billion

Tax multiplier

= $\frac{-MPC}{1-MPC}$

= $\frac{-0.9}{1-0.9}$

= -9

The government needs to decrease taxes

= $\frac{GDP\ Gap}{Tax\ multiplier}$

= $\frac{4.5}{9}$

= $0.5 billion

b. The marginal propensity to consume is 0.50.

Government spending multiplier

= $\frac{1}{1-MPC}$

= $\frac{1}{1-0.5}$

= 2

If the government increases spending by $0.45 billion,

The real GDP will increase by

= $Increase\ in\ spending\ \times\ Spending\ multiplier$

= $\$ 0.45\ \times\ 2$

= $0.9 billion

The real GDP will fall short of potential GDP by

= $4.5 billion - $0.9 billion

= $3.6 billion

c. Tax multiplier

= $\frac{-MPC}{1-MPC}$

= $\frac{-0.5}{1-0.5}$

= -1

If the government decreases taxes by $0.5 billion

The real GDP will increase by

= $$0.5\ billion\ \times 1$

= $0.5 billion

The real GDP will fall short of potential GDP by

= $4.5 billion - $0.5 billion

= $4 billion

d. If the government overestimates the value of the MPC, then its change in spending or taxes will be too small and real GDP will fall short of potential GDP.

4 0

3 years ago

Which statement best describes a musical motive?

arlik [135]

the answer is b im not too sure tho

4 0

3 years ago

Read 2 more answers

Time Remaining 1 hour 48 minutes 56 seconds01:48:56 Item 5Item 5 Time Remaining 1 hour 48 minutes 56 seconds01:48:56 Accounts pa

scoray [572]

Answer:

Amounts owed to suppliers for products and/or services purchased on credit.

Explanation:

Accounts payable are basically short term debts that a company has with its suppliers. E.g. a retailer purchases goods from a wholesaler on terms n/30. In this case, the accounts payable would be the amount of money owed to the retailer. There is no specific time frame for an accounts payable, since it varies depending on the credit that the supplier gives. E.g. sometimes a supplier will sell on a 45 day credit period, or even 60 day period.

6 0

3 years ago

People who receive the benefit of a good without contributing to its costs of production are called?

masha68 [24]

Free riders are those who gain from a thing without contributing to its manufacturing expenses.

<h3>When the creation of a thing incurs external expenses, the?</h3>

An external cost occurs when the production or use of a goods or service imposes a cost (negative effect) on a third party.
If a good has external costs connected with it (negative externalities), the social costs will be larger than the private cost.
Market failure may occur in the presence of external expenses. This is because the free market frequently ignores the existence of external expenses.
The cost to a third party of consuming/producing one more unit is known as the external marginal cost (XMC).

learn more about external costs refer:

brainly.com/question/14203073

#SPJ4

5 0

1 year ago

f interest rate parity (IRP) exists, then triangular arbitrage will not be possible. A. true. B. false.

Levart [38]

Answer:

A. True

Explanation:

Arbitrage refers to a situation wherein a gain is made owing to price discrepancy or unevenness in two markets. The rule for arbitrage is to buy from the markets where price is less and sell in the markets where price is higher.

Triangular arbitrage occurs wherein 3 different currencies are involved and the exchange rates are not uniform i.e a discrepancy exists and interest rate parity does not hold true.

Interest rate parity refers to the concept wherein the disparity between two currency exchange rates is adjusted by the respective interest rates of the two countries. When interest rate parity exists, no arbitrage is possible as markets are fairly priced.

3 0

3 years ago