A local government currently has a tax base of $4 million and a tax rate of 5 percent. If the tax rate is increased to 6 percent, the tax base will decrease to $3.5 million. If the goal is to maximize tax revenues the tax rate should be

Why does real GDP have limitations in determining economic welfare?

What will be an ideal response?

Suppose that real GDP is initially $14 trillion and the government attempts to increase real GDP to $15 trillion

The marginal propensity to consume is 0.8, and every $1.00 increase in real government spending crowds out $0.50 in real planned investment expenditures. Which increase in government spending below could yield the desired level of real GDP? A) $100 billion B) $125 billion C) $200 billion D) $400 billion