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DENIUS [597]
3 years ago
14

If short-run equilibrium output equals 10,000, the income-expenditure multiplier equals 10, and potential output (Y*) equals 9,0

00, then government purchases must ______ to eliminate any output gap.
A. increase by 100
B. decrease by 100
C. increase by 1,000
D. decrease by 1,000
Business
1 answer:
lyudmila [28]3 years ago
4 0

Answer: Option (b) is correct.

Explanation:

Given that,

short-run equilibrium output = 10,000

income-expenditure multiplier = 10

potential output (Y*) = 9,000

Expenditure multiplier = \frac{1}{1-slope\ of AE function}

10 = \frac{1}{1-slope\ of AE function}

Slope of AE function = 0.9

slope of AE =  MPC (1-t)  t =0,

MPC = 0.9

Delta Y (DY) = 1000

government expenditure multiplier ⇒ \frac{1}{1 - MPC} = 10

Delta G = \frac{DY}{government\ expenditure\ multiplier}

             = \frac{1,000}{10}

             = 100

Government purchases must be Decrease by 100.

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7 0
2 years ago
Is shift work involved in electrician?
Hunter-Best [27]

Answer:

Yes

Explanation:

3 0
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Carlos bought a building for $113,000 in 2012. he added an addition to the building for $26,000. in 2016, he sold it for $212,00
rodikova [14]
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4 0
3 years ago
On July 1, 2021, Larkin Co. purchased a $460,000 tract of land that is intended to be the site of a new office complex. Larkin i
vova2212 [387]

Answer:

$75,300

Explanation:

The computation of the balance in the land is shown below;

Purchase cost

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Add:

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Add:

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$12,900

Less:

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Therefore, balance in the land account as of December 31, 2021 is $75,300

3 0
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zepelin [54]

Answer:

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