Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Using the given data: Suppose that the full-employment level of output is Yf=8000. Which among the following statement must be done to eliminate the gap?
Using the given data:
Suppose that the full-employment level of output is Yf=8000. Which among the following statement must be done to eliminate the gap? Statement 1: An expansionary fiscal policy: decrease lump-sum taxes by the amount equal to the [ (computed gap)* (0.70 /0.30) ] Statement 2: An expansionary fiscal policy: increase government spending by the amount equal to the [ (computed gap)* (1 /0.30) ] Statement 3: A contractionary fiscal policy: increase lump-sum taxes by the amount equal to the [ (computed gap)* (0.70 /0.30) ] Statement 4: A contractionary fiscal policy: decrease government spending by the amount equal to the [ (computed gap)* (1 /0.30) ] Statement 5: Decrease lump-sum taxes by the amount equal to the computed gap Statement 6: Increase government spending by the amount equal to the computed gap O Only statement 2 is correct Only statements 1 and 2 are correct O None of the choices include the statement numbers that are correct O Only statements 3 and 4 are correct O Only statement 3 is correct O Statements 1, 2. 5 and 6 are correctConsider the following macroeconomic data of the Galactic Republic, which has a currency called cred. Autonomous 700 Consumption Marginal Propensity to 0.70 Consume Investment 420 Government 840 Expenditure Government Transfers 210 Lump-sum Tax 280Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started