Exam 24: The Algebra of Demand-Side Equilibrium

A $200 increase in government purchases has less of an impact on the equilibrium level of real GDP than a decrease in autonomous net taxes of $200 would.

Assume autonomous net taxes rise by $500; the marginal propensity to consume = 3/4.Net exports,planned investment,taxes,and government purchases are autonomous and remain fixed.Disposable income will initially

Of the following fiscal programs,which has the biggest effect,per dollar,on aggregate demand?

Exhibit 11-5 -In an economy characterized by the aggregate expenditure line in Exhibit 11-5,how would a $100 decrease in autonomous government spending impact real GDP?

Exhibit 11-5 -In an economy characterized by the aggregate expenditure line in Exhibit 11-5,what would the equilibrium real GDP be equal to if autonomous government spending decreased by $100?

A decrease in net taxes

Exhibit 11-5 -In an economy characterized by the aggregate expenditure line in Exhibit 11-5,if net taxes was independent of the level of real GDP what would the tax multiplier be equal to?

If the MPC equals 0.75 and G increases by $100,real GDP demanded will increase by

A tax is considered to be autonomous if it is independent of

If the MPC = 0.8,then the simple tax multiplier equals

A $100 billion increase in government purchases will have the same effect on real GDP as a $100 billion decrease in taxes.

Assume autonomous net taxes fall by $300; the MPC = 2/3.Net exports,planned investment,taxes,and government purchases are autonomous and remain fixed.As a result,equilibrium real GDP demanded will

A decrease in autonomous net taxes

Equal increases in government purchases and in net taxes have equal but opposite effects on the level of real GDP demanded.

If the MPC is 0.75,a decrease in net taxes of $100 billion will increase the equilibrium level of real GDP by

Exhibit 11-5 -In an economy characterized by the aggregate expenditure line in Exhibit 11-5,if government spending was independent of the level of real GDP what would the government spending multiplier be equal to?

When government purchases increase,the spending multiplier tells us the

Exhibit 11-5 -In an economy characterized by the aggregate expenditure line in Exhibit 11-5,how would a $100 increase in autonomous net taxes impact real GDP?

"Net taxes" equals "taxes minus transfer payments."

An increase in the MPC will increase the simple tax multiplier but have no effect on the simple spending multiplier.