Assume that the tax rate t is 0.25, Y_P is 1,000, and G is 200. Which of the following statements is CORRECT?

Question 21Select one:

a.If Y increases, the structural budget balance will increase

b.There will be zero budget balance when Y is 900

c.The structural budget balance is 50

d.With negative GDP gap of 25%, the budget balance is 0

Suppose the MPC is 0.75 out of disposable income (YD) and the government imposes a net tax rate of 0.2. What is the MPC out of national income (Y)?

Question 22Select one:

a.0.16

b.0.5

c.0.6

d.0.64

supppose households spend $50 billion in autonomous spending and 80% of after-tax income. Taxes equal 10% of income. If income is $500 billion, what is the total tax revenue for the government?

Question 23Select one:

a.$100 billion

b.$50 billion

c.$400 billion

d.None of the answers is correct

The actual (observed) government balance depends simply on:

Question 24Select one:

a.Government support for social programs and national defense

b.Government net tax rates, government expenditures on goods and services, and the actual level of nominal GDP

c.Government expenditures on goods and services

d.The net tax rates set by the government

Suppose we observe that the government has an actual budget deficit of $20 billion. What can we conclude?

Question 25Select one:

a.The economy was in a recession

b.Discretionary fiscal policy was contractionary

c.Discretionary fiscal policy was expansionary

d.We cannot identify the current state of discretionary fiscal policy