Which one would have been the correct answer? Which one would have been the corr

Question

Which one would have been the correct answer?


Which one would have been the correct answer?


Which one would have been the correct answer?


Question 20 0/1 pts Germany is considered the leading economy of the Eurozone. In 2006, it has a trade surplus with China and with the Southern countries of the Eurozone (Greece, Portugal, Spain). Germany economy is characterized by: C-100 + (45)"YD; 1-200, G-400, ?-600, IM-300; T-600. Reference 13 In order to offset the lower investment falling by 100, policy makers consider lowering taxes by 100. What will be the impact on GDP? GDP will increase by $100. GDP will increase by $400 GDP will increase by $1000 GDP will not change

Explanation / Answer

Answer : Option B is correct.

Earlier when there are no taxes reduced than GDP of Germany :

GDP = C+ I+G +( X-M)

GDP =100+(4/5)(Y-T) +I +G +( X-M)

Y = 100+(4/5)Y-480+400+200+300

5Y-4Y = 2600

Y= 2600

When taxes has been reduced by $100

Y= C+G+I+ (NX-M)

Y= 100+(4/5)Y-400+400+200+300

5Y-4Y= 3000

Y= 3000

Therefore , GDP has been increased by $400 with reduced taxes by $100.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

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