ECON 2450 : Chapter 8 Practise with Answers
Document Summary
Analytical exercise 2 from textbook (p. 267: because it does not affect the marginal propensity to expend, it does not affect the slope of the planned expenditure line. Analytical exercise 4 from textbook (p. 268: it is the product of the net-of-tax rate one minus the tax rate and the marginal propensity to consume. Policy exercise 1 from textbook (p. 268: tax collections fall to 30% of 950 billion = billion. The government is now running a budget surplus of billion a year: tax collections rise to 30% of 1. 2 trillion = billion. The government is now running a budget surplus of billion a year: the actual budget surplus is shifted around not just by changes in government policy but by other changes in the macroeconomy as well. The full- employment surplus (or deficit) has the advantage of being affected by changes in policy alone.