Question: Please answer correct calculation asap plz Don't answer by pen paper plz An economy is initially in longrun equilibrium with a price level of 100

Please answer correct calculation asap plz

Don't answer by pen paper plz

An economy is initially in longrun equilibrium with a price level of 100 and real GDP of $5 billion. Then. an increase in demand for exports shifts demand from ADl to AD2 . This causes GDP to increase to $7 billion and the price level to increase to 110. The federal government decides to cut government spending in order to return to the longrun equilibrium and price level. The marginal propensity to consume is 0.5. How much should the government reduce spending by? A. $1 billion B. $1.5 billion C. 52 billion D. $3 billion

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Please answer correct calculation asap plz both are questions Please don't answer by pen paper plz Identify the profit-maximising output and price. Please explain all steps. What is the profit or...

Please answer correct calculation asap plz both are questions c d e Don't answer by pen paper plz -.500 -1,000 -1,500 -2000 -2,500 9.000 20.00 21,000 22,000 23,000 24,000 25,000 26.000 27,000 28.000...

Please answer correct calculation asap plz both are correct option Don't answer by pen paper plz D Question 5 After the implementation of the $3 per pack tax on cigarettes, the new equilibrium...

Please answer correct calculation asap plz Don't answer by pen paper plz Two firms both produce leather boots. The inverse demand equation is given by P = 340 - 2Q, where P is the price of boots in...

Please answer correct calculation explain asap plz Don't answer by pen paper plz The monopolist is currently producing Q= 2000, Price charged = $500, MR of the last unit produced is $300, Marginal...

Please answer correct calculation asap plz Don't answer by pen paper plz Price and cost ($) LAC $10 80 Q (units) The diagram above shows a typical firm in long-run equilibrium in a perfectly...

Please answer correct calculation asap plz Don't answer by pen paper plz Suppose that your town decides to impose a tax on 2liter bottles of soda to encourage healthier dietary habits. Before the...

Based on what you have learned using the Aggregate Demand-Aggregate Supply Model of the economy: In the short run, how will an increase in aggregate demand, ceteris paribus , most likely affect the...

Please answer correct please asap please Don't answer by pen paper plz The following events occurred in the recent past in Canada: 1' The world economy goes into an expansion. in Canadian businesses...

Interest rates in the economy have risen. How will this affect aggregate demand and equilibrium in the short run? a.Aggregate demand will rise, the equilibrium price level will rise, and the...

Refer to Exercise 14.32. Use Tukeys multiple comparison method to test each pair of degree categories (DEGREE) with respect to income (INCOME).

Choose the one correct or one incorrect statement regarding chromatography: gravity can be used as a delivery system the mobile phase can be a gas the chromatographic bed can be a resin the...

Which of the following would not include any temporary accounts?Multiple Choicetrial balanceincome statementstatement of owner's equitybalance sheet

Discuss why it is important to have a good project management plan to implement or redesign an entire information system.

5. Starting with a motive you may have for acting the way you do in a particular situation: a) What purpose did you seek to achieve? b) Which aspects of your past and your surroundings influenced...

3. (Constructing a metaphor about something can be done by comparing it to something else by using the word is. For instance, Communication is a bridge between people.

1. The first party (the sender) may dispute the validity of the interpretation, or 2. He/she can accept the interpretation.