Question 10 (2 points)

Assume you have the following data:

C= $50 + 0.625Y_d

I = $250

G =$750

EX - IM = 0

T = $400 + .2Y

Y^P = $1725 [Potential GDP]

Calculate the demand function and indicate what the intercept of the demand function would be. For your answer only put the intercept for the demand function. [HINT: As an example, suppose the demand for was Z = 200 +0.5Y (THIS IS NOT THE ACTUAL ANSWER), the intercept term would be 200 and the unit value would be $]

Your Answer:

Question 10 options:

Answer	units

Question 11 (2 points)

Assume you have the following data:

C= $50 + 0.625Y_d

I = $250

G =$750

EX - IM = 0

T = $400 + .2Y

Y^P = $1725 [Potential GDP]

Calculate the demand function and indicate what the slope of the demand function would be. For your answer only put the slope for the demand function. [HINT: As an example, suppose the demand for was Z = 200 +0.5Y (THIS IS NOT THE ACTUAL ANSWER), the slope would be 0.5 and their would be no unit value and do not put the Y in the slope value]

Your Answer:

Question 11 options:

Answer

Question 12 (2 points)

Assume you have the following data:

C= $50 + 0.625Y_d

I = $250

G =$750

EX - IM = 0

T = $400 + .2Y

Y^P = $1725 [Potential GDP]

Solve for equilibrium GDP. [HINT: As an example, suppose equilibrium GDP was $2000 (THIS IS NOT THE ACTUAL ANSWER), the answer would be 2000 and their would be a $ unit value]

Your Answer:

Question 12 options:

Answer	units

Question 13 (2 points)

Assume you have the following data:

C= $50 + 0.625Y_d

I = $250

G =$750

EX - IM = 0

T = $400 + .2Y

Y^P = $1725 [Potential GDP]

Solve for the tax revenues when the economy is at equilibrium GDP. [HINT: As an example, suppose the tax revenues was $500 (THIS IS NOT THE ACTUAL ANSWER), the answer would be 500 and their would be a $ unit value]

Your Answer:

Question 13 options:

Answer	units

Question 14 (3 points)

Assume you have the following data:

C= $50 + 0.625Y_d

I = $250

G =$750

EX - IM = 0

T = $400 + .2Y

Y^P = $1725 [Potential GDP]

Comparing the economy's tax revenue when output is at equilibrium to government spending, we can conclude that the government is running a

Question 14 options:

	Cyclical Deficit
	Structural Deficit
	Surplus
	Balanced Budget

Question 15 (2 points)

Assume you have the following data:

C= $50 + 0.625Y_d

I = $250

G =$750

EX - IM = 0

T = $400 + .2Y

Y^P = $1725 [Potential GDP]

How much should the government change their government expenditures to bring the economy to potential GDP? [HINT: If government expenditures should increase by $200, you would put 200 in the answer and for units have $. If government expenditures should decrease by $200, you would put -200 in the answer and for units have $]

Your Answer:

Question 15 options:

Answer	units

Question 16 (3 points)

Assume you have the following data:

C= $50 + 0.625Y_d

I = $250

G =$750

EX - IM = 0

T = $400 + .2Y

Y^P = $1725 [Potential GDP]

After the government change in spending to bring the economy to potential GDP, in terms of the budget, the government is running a

Question 16 options:

	Cyclical Deficit
	Structural Deficit
	Surplus
	Balanced Budget

Question 17 (2 points)

Assume you have the following data:

C= $50 + 0.625Y_d

I = $250

G =$750

EX - IM = 0

T = $400 + .2Y

Y^P = $1725 [Potential GDP]

How much should the government change taxes to bring the economy to potential GDP? [HINT: Use all 3 decimal places when using your tax multiplier, i.e., if your tax multiplier is 1.785 use the entire multiplier, do not round. If taxes should increase by $100, you would put 200 in the answer and for units have $. If taxes should decrease by $100, you would put -100 in the answer and for units have $]

Your Answer:

Question 17 options:

Answer	units

Question 18 (3 points)

Assume you have the following data:

C= $50 + 0.625Y_d

I = $250

G =$750

EX - IM = 0

T = $400 + .2Y

Y^P = $1725 [Potential GDP]

After the government change in lump-sum taxes (with no change in government spending) to bring the economy to potential GDP, in terms of the budget, the government is now running a

Question 18 options:

	Cyclical Deficit
	Structural Deficit
	Surplus
	Balanced Budget