Handwritten solution

WW Write TRUE if the statement is correct. Othenvise, write FALSE. Show your solution if' necessary. Use the table below to answer questions #5 l to 8: 9'94\"!\" 9' [0. ll. 12. Marginal Propensity to Consume Government Expenditure 300 million pesos The equilibrium income of this economy is 925 million pesos. (2 pts) The economy has a budget surplus ot'3?5 million pesos. 0.5 pot) The government spending multiplier is equal to 0.25. (1.5 p15) A 200 million peso increase in government spending will increase equilibrium income by 200 million pesos. H.5p13} The lump-sum tax multiplier is 4133. (1.5 pm} A 200 million peso increase in lump-sum taxes will increase equilibrium income by 66.67 million pesos. (2 pts) If the government wants to increase equilibrium income by 300 million pesos, it needs to increase government spending by 225 million pesos. (2 p15) By increasing lump sum tax collection by 900 million pesos, the government can increase equilibrium income by 300 million pesos. {2 p15) Income taxes decrease aggregate output because of its negative e'ect on consumption spending and aggregate expenditures. (I pr) Other things remaining the same, a higher marginal propensity to consume makes Ihe absolute value of the income tax multiplier larger. ('1 pr) It is possible for the government to adjust its spending and taxes in a way that raises aggregate output but leaves the budget deficit unchanged. (1 pr) The effect of higher income taxes on consumption spending in equilibrium is not clear because it also reduces equilibrium income. (I pr)