27. Let the government increase spending by 10$ with a money multiplier of 3. What is the total amount of debt? What is the total new income? Let the tax rate = 10%. How much of the new income comes back to the government? How much is added to the deficit? 28. Let potential income (X") 10$ Trillion and actual income (X^) = 9.8$ Trillion. What is the structural deficit in both trillions and billions of dollars? Let the tax rate = 10%. Identify the passive deficit and the actual deficit. Show your work!

27. Let the government increase spending by 10$ with a money multiplier of 3. What is the total amount of debt? What is the total new income? Let the tax rate = 10%. How much of the new income comes back to the government? How much is added to the deficit? 28. Let potential income (X") 10$ Trillion and actual income (X^) = 9.8$ Trillion. What is the structural deficit in both trillions and billions of dollars? Let the tax rate = 10%. Identify the passive deficit and the actual deficit. Show your work!

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter30: Government Budgets And Fiscal Policy

Section: Chapter Questions

Problem 51P: A government starts off with a total debt of $3.5 billion. In year one, the government runs a...

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