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Sonja [21]
3 years ago
8

If real GDP is $200 billion, full employment GDP is $500 billion, and the marginal propensity to consume is 0.75, then Congress

should decrease taxes by $50 billion. increase government purchases by $50 billion. decrease government purchases by $50 billion. decrease taxes by $100 billion. increase government purchases by $300 billion.
Business
1 answer:
Anuta_ua [19.1K]3 years ago
3 0

Answer:

The answer is: decrease taxes by $100 billion.

Explanation:

If the real GD is $200 billion, which represents only 40% of full employment GDP, then the government should try to increase consumer spending either by decreasing taxes or increasing government spending, or a combination of both.

In this case, I chose the tax decrease since government have budget limitations and they can only decrease taxes by so much before hitting a deficit. Additionally, when you have a large tax reduction, usually government spending either stays the same or decreases.

If the government decreases taxes by $100 billion, the marginal propensity to consume shall result in a $75 billion increase in consumption. According to the Keynesian Multiplier theory, that $75 billion should generate additional production, creating a virtuous cycle that should increase the real GDP in a larger proportion.

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Answer:

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Explanation:

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5 0
3 years ago
A(n) _____ is central to individuals and organizations of all sizes and ensures that information can be shared across all busine
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3 0
3 years ago
What is the role of Scientific management in the modern era?​
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The Scientific management in the modern era is management that analyzes and synthesizes workflows.

The role of  Scientific management in the modern era is improving economic efficiency, especially in the labor productivity. It is a systematic approach to handle management problems. It implies scientific techniques in method of work, recruitment, selection and training of workers.

Scientific management in the modern era is helped in the enhanced production. The employees perform repetitive tasks and are therefore easily controlled by the management.

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6 0
2 years ago
Mitch, a single taxpayer, earns $100,000 in taxable income and $10,000 in interest from an investment in city of Birmingham Bond
Ivan

Answer:

The answer is: $18,289.50

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The interest earned from the investment in Birmingham Bonds is not included in Mitch's gross income.

If Mitch earned $100,000, so he will fall under the fourth bracket for single filers.

He will have to pay $14,089.50 plus 24% of any income over $82,500.

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3 years ago
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