63 772
Assignments Done
99,3%
Successfully Done
In August 2018

Answer to Question #53 in Other Math for Lori

Question #53
A government is currently operating with an annual budget deficit of $40 billion. The government has determined that:
• Every $10 billion reduction in the amount of bonds it issues each year would reduce the market interest rate by 0.1 percentage point.
• Every 0.1 percentage point change in the market interest rate generates a change in planned investment expenditures in the opposite direction equal to $5 billion. The marginal propensity to consume is 0.75.
• To eliminate an inflationary gap and take into account the resulting change in the price level, the government must generate a net leftward shift in the aggregate demand curve equal to $40 billion.
Assuming that there are no direct expenditure offsets to fiscal policy, how much should the government increase taxes? Explain by giving appropriate reasons.
Expert's answer
This is a huge assignment on economics. We can help you with this task RIGHT NOW! All you have to do is to submit your assignment on our website.

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be first!

Leave a comment

Ask Your question

Submit
Privacy policy Terms and Conditions