Question : 61) You hired by the Council of Economic Advisors (CEA) : 1381136

61) You are hired by the Council of Economic Advisors (CEA) as an economic consultant. The Chairperson of the CEA tells you that she believes the current unemployment rate is too high. The unemployment rate can be reduced if aggregate output increases. She wants to know what policy to pursue to increase aggregate output by $300 billion. The best estimate she has for the MPC is 0.8. Which of the following policies should you recommend?

A) Increase government purchases by $60 billion.

B) Increase government purchases by $150 billion.

C) Cut taxes by $60 billion.

D) Cut taxes by $60 billion and to increase government purchases by $60 billion.

62) You are hired by the Bureau of Economic Analogies (BEA) as an economic consultant. The Chairperson of the BEA tells you that he believes the current unemployment rate is too low. The unemployment rate can be increased if aggregate output decreases. He wants to know what policy to pursue to decrease aggregate output by $100 billion. The best estimate he has for the MPC is 0.9. Which of the following policies should you recommend?

A) Decrease government spending by $10 billion.

B) Decrease government spending by $100 billion.

C) Increase taxes by $100 billion.

D) Cut taxes by $60 billion and to increase government spending by $60 billion.

63) You are hired by the Council of Economic Advisors (CEA) as an economic consultant. The chairperson of the CEA tells you that she believes the current unemployment rate is too high. The unemployment rate can be reduced if aggregate output increases. She wants to know what policy to pursue to increase aggregate output by $300 billion. The best estimate she has for the MPC is 0.8. Which of the following policies should you recommend?

A) Increase government purchases by $75 billion.

B) Reduce taxes by $75 billion.

C) Reduce taxes by $75 billion and to increase government purchases by $75 billion.

D) Reduce the budget deficit by $300 billion.

64) You are hired by the Bureau of Economic Analogies (BEA) as an economic consultant. The chairperson of the BEA tells you that he believes the current unemployment rate is too high. The unemployment rate can be reduced if aggregate output increases. He wants to know what policy to pursue to increase aggregate output by $500 billion. The best estimate he has for the MPC is 0.7. Which of the following policies should you recommend?

A) Decrease government spending by $75 billion.

B) Reduce taxes by $214.3 billion.

C) Reduce taxes by $314.3 billion and to decrease government spending by $500 billion.

D) Reduce the budget deficit by $300 billion.

65) You are hired by the Council of Economic Advisors (CEA) as an economic consultant. The chairperson of the CEA tells you that she believes the current unemployment rate is too high. The unemployment rate can be reduced if aggregate output increases. She wants to know what policy to pursue to increase aggregate output by $300 billion. The best estimate she has for the MPC is 0.8. Which of the following policies should you recommend?

A) Increase government spending by $300 billion and reduce taxes by $300 billion.

B) Reduce government spending by $300 billion and increase taxes by $300 billion.

C) Increase both government spending and taxes by $300 billion.

D) Decrease both government spending and taxes by $300 billion.

66) You are hired by the Bureau of Economic Analogies (BEA) as an economic consultant. The chairperson of the BEA tells you that he believes the current unemployment rate is too high. The unemployment rate can be reduced if aggregate output increases. He wants to know what policy to pursue to increase aggregate output by $500 billion. The best estimate he has for the MPC is 0.75. Which of the following policies should you recommend?

A) Reduce government spending by $500 billion and reduce taxes by $500 billion.

B) Increase both government spending and taxes by $500 billion.

C) Increase government spending by $500 billion and reduce taxes by $500 billion.

D) none of the above

67) As the size of the MPC increases, the value of the balanced-budget multiplier

A) increases.

B) decreases.

C) remains constant.

D) could either increase or decrease.

68) Suppose that in the beginning of 2012 the federal debt was $9 trillion. During 2012, the government balanced its budget. At the end of 2012, the federal debt

A) increased.

B) stayed the same.

C) decreased.

D) was eliminated.

69) If autonomous spending increases, the aggregate expenditure function becomes steeper.

70) If the government increases taxes by $4 billion and increases spending by $4 billion, equilibrium output increases by $4 billion.

71) A tax cut of $12 billion will have less effect on the economy than an increase in government purchases of $12 billion.