overnments attempt to stimulate economies by offering firms temporary investment tax credits. Explain the effects of this measure on investment spending. Would you expect a permanent or temporary measure to have more effect.
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- Governments attempt to stimulate economics by offering firms temporary investment taxcredits. Explain the effects of this measure on investment spending. Would you expect apermanent or temporary measure to have more effect?How can a tax cut increase investment, and what is the impact on the economy?Explain what happens to consumption, investment, and the interest rate when the government increases taxes.
- A $300 million decrease in investment spending will increase real GDP by more than $300 million. Is this a true statement? What is the relationship between investment spending and the GDP? I think that investment spending goes directly into the economy so I believe the answer to be true. But I am not sure.If planned expenditures are below actual production, what will happen to income? Explain the process by which this happens.If government spending is permanently increased, consumption and investment would fail? True or False
- In a closed economy, what determines consumption, investment, and government expenditures? Please include in your answer the form of the consumption function, investment function, and government expenditure function.What happens to domestic investment as the real interest rate rises? Explain your answer.Consider the economy of Canada. Its households spend 55% of increases in their income and saves 45 %. There are no taxes and no foreign trade. Currently, Canada has a recessionary gap, the governments aim is to get actual output to increase by 220 billion dollars. How much of a tax cut do they need to have to achieve the overall increase in output of 220 billion dollars?
- US Real GDP fell by 9 percent during the 2nd quarter of 2020. Real investment spending fell by 16.9 percent during Q2 of 2020, and investment spending makes up about 20 percent of GDP. How much did the decline in investment spending contribute to the decline in real GDP in the US during Q2 of 2020?The fluctuations in the income level that result from changes in investment spending depend only on the magnitude of the changes in investment spending but not on the size of the MPC tend to be larger if the income tax rate (t) is larger tend to be larger with a larger MPC tend to be larger the larger the marginal propensity to import tend to be larger with a larger MPSIn the country of Krugman, a business spent $100 million building a factory. GDP eventually increased by 200 million. People spend 11% of every dollar on imports. What is the marginal propensity to consume in this economy? Write your answer as a number, between 0 and 1. If you think the answer is 0, write 0.00, not 0. Answer: Study the graph below. When will the multiplier be biggest? Select one: The multiplier will be the same size no matter what Aggregate Demand is b. The multiplier will be one no matter what aggregate demand is When aggregate demand is at AD1 d. When aggregate demand is at AD3 e When aggregate demand is at AD2 Price Level AD₁ AS e All of these are true AD₂ AD₁ GDP Why is potential output called potential, when it is not actually the most the economy can produce? Select one: a. Because potential is the most the economy can produce right now, with the technology and workers and equipment we have right now. Ob. Because economists just like to be confusing for no reason…
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