Assume you have the following data:

C= $600 + 0.625Y_d

I = $806.25

G =$1125

EX - IM = 0

T = $250 + .2Y

Y^P = $5,000 [Potential GDP]

How much should the government change their government expenditures to bring the economy to potential GDP? [HINT: If government expenditures should increase by $200, you would put 200 in the answer and for units have $. If government expenditures should decrease by $200, you would put -200 in the answer and for units have $]

Your Answer:

Question 6 options:

Answer	units

Question 7 (3 points)

Assume you have the following data:

C= $600 + 0.625Y_d

I = $806.25

G =$1125

EX - IM = 0

T = $250 + .2Y

Y^P = $5,000 [Potential GDP]

After the government change in spending to bring the economy to potential GDP, in terms of the budget, the government is running a

Question 7 options:

	Cyclical Deficit
	Structural Deficit
	Surplus
	Balanced Budget

Question 8 (2 points)

Assume you have the following data:

C= $600 + 0.625Y_d

I = $806.25

G =$1125

EX - IM = 0

T = $250 + .2Y

Y^P = $5,000 [Potential GDP]

How much should the government change taxes to bring the economy to potential GDP? [HINT: Use all 3 decimal places when using your tax multiplier, i.e., if your tax multiplier is 1.785 use the entire multiplier, do not round. If taxes should increase by $100, you would put 200 in the answer and for units have $. If taxes should decrease by $100, you would put -100 in the answer and for units have $]

Your Answer:

Question 8 options:

Answer	units

Question 9 (3 points)

Assume you have the following data:

C= $600 + 0.625Y_d

I = $806.25

G =$1125

EX - IM = 0

T = $250 + .2Y

Y^P = $5,000 [Potential GDP]

After the government change in lump-sum taxes (with no change in government spending) to bring the economy to potential GDP, in terms of the budget, the government is now running a

Question 9 options:

	Cyclical Deficit
	Structural Deficit
	Surplus
	Balanced Budget

Question 10 (2 points)

When an asset is traded for goods and services, it serves the function of a ________.

Question 10 options:

	store of value
	unit of account
	loanable fund
	medium of exchange

Question 11 (2 points)

When an asset enables people to transfer purchasing power into the future, it serves the function of a ________.

Question 11 options:

	store of value
	unit of account
	medium of exchange
	measure of inflation