Only typed answer The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the government decides to conduct fiscal policy by changing taxes to reducethe burden of this recession.LRAS180-100-140120K1008060-40Price Level200-200Fiscal Policy0AD₁Real GDP (billions of dollars)ASAD Instructions: Include a negative sign (-) if necessary.a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium?$billionb. Assuming the MPC in this nation is 0.75, how much do taxes need to change to shift aggregate demand by the amount you found in part a?$billionc. Now suppose the MPC is 0.6. To restore the economy to its long-run equilibrium, aggregate demand must be changed by $billion.Ask your instructor a questionbillion and taxes must be changed by $

The impact of change in aggregate demand due to the change in government spending is more than that…

The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the government decides to conduct fiscal policy by changing taxes to reduce the burden of this recession. Price Level 200 180- 100- 140- 120- 100- 80 60- 40 20- 0 Fiscal Policy LRAS AD₁ Real GDP (billions of dollars) AS AD

The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the government decides to conduct fiscal policy by changing taxes to reduce the burden of this recession. Price Level 200 180- 100- 140- 120- 100- 80 60- 40 20- 0 Fiscal Policy LRAS AD₁ Real GDP (billions of dollars) AS AD

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 30RQ: Under what general macroeconomic circumstances might a government use expansionary fiscal policy?...

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1. Provide a written conclusion on Fiscal Policy?
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Explain, using the AD‐AS model, how the South African Government can use fiscal policy as a tool to recover from the negative effects of this COVID‐19 pandemic.Your answer must include the following:The description of the type of fiscal policy requiredAn explanation of how the implementation of this tool will work their waythrough the economy to achieve the desired effect;The AD‐AS graph showing the implications of your recommendations.
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The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the government decides to conduct fiscal policy by changing toxes to reduce the burden of this recession. Fiscal Policy 140 LRAS AS 130 120 110 100 90 80 70 AD 60 50 AD, 40 80 160 240 320 400 480 560 640 720 800 Real GDP (billions of dollars) Instructions: Enter your answer as a whole number. If you are entering a negative number include a minus sign. a. How much does oggregate demanci need to change to restore the economy to its long-run equilbrilum? billion b. If the MPC is 0.667, how much do taxes need to change to shift aggregate demand by the amount you found in part a? billion Suppose instead that the MPC is 0.5. C. How much does aggregate demand and taxes need to change to restore the economy to its long-run equilibrium? Aggregate demand needs to change by $ [ billion and taxes need to change by $ billion. Price Level