can you explain how you get the answer for each question? 12. Which of the follo

Question

can you explain how you get the answer for each question?

12. Which of the following is a cost associated with recessions and unemployment? A) increased real output B) the psychological harm done to the unemployed C) increased output in the future D) worsening of the nation's balance of payments The Italian economy can be characterized by Equation 9.1 EQUATION 9.1 C 300 + 0.8 Yd G = 400 T = 200 200 49. Refer to Equation 9.1. The equilibrium level of output for the Italian economy is A) $2,850 B) $3,145 C) $3,700. D) $3,800. 51. The President of Vulcan hires you as an economic consultant. He is concerned that the output level in Vulcan is too high and that this will cause prices to rise. He feels that it is necessary to reduce output by $10 billion. He tells you that the MPC in Vulcan is 0.6. Which of the following would be the best advice to give to the Vulcan president? A) reduce government purchases by $4 billion B) increase taxes by $10 billion C) reduce government purchases by $10 billion D) increase taxes by $2.5 billion 52. The leader of Atlantis hires you as an economic consultant. He is concerned that the output level in Atlantis is too low and that this is causing unemployment. She feels that it is necessary to increase output by $200 billion. She tells you that the MPC in Atlantis is 0.8. Which of the following would be the best advice to give to the Atlantis president? A) reduce government spending by $100 billion B) decease taxes by $50 billion C) increase government spending by $200 billion D) increase government spending by $100 billion

Explanation / Answer

12. Option D is correct. worsening of the nations balance of payment is a cost associated with recessions and unemployment.

49. C= 300+0.8 Yd , G = 400, T = 200, I = 200

Y = C + I +G

Y = 300+0.8 Yd +200+400

Y = 300+0.8 (Y -200) +600

Y = 300 +0.8 Y -160 +600

0.2 Y = 900-160

0.2Y = 740

Y = 3700

So o[ption C $ 3700 is correct

51) Option a is correct Reduce governmnent puchase by $4 billion.

Multiplier = 1/(1-MPC) = 1/ (1-0.6) = 2.5

Reduction in output when government purchase reduce by 4 billion = 4*2.5 = 10

52) Option B is correct. Decrease taxes by 50 billion

Multiplier = 1/(1-MPC) = 1/(1-0.8) = 5

Increase in output when taxes reduce by 50 billion = 50*5 = 250

So net output will incraese by = 250-50 = $200 billion.

Y = 3300

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.