Question

Expert economists in the economy of Bongo estimate the​ following:

	Billion Bongos
Real​ output/income	1 comma 2001,200
Government purchases	200200
Total net taxes	200200
Investment spending​ (planned)	100100

Assume that Bongoliers consume

8080

percent of their disposable incomes and save

2020

percent.

You are asked by the business editor of the Bongo Tribune to predict the events of the next few months.

By using the data given and assuming that investment is​ constant, if the government of Bongo makes no​ changes, you predict that income will

▼

fall, since aggregate expenditure is less than output/income

rise, since aggregate expenditure is less than output/income

not change

.If no changes are​ made, the economy of Bongo will settle at a level of GDP of

nothing

billion Bongos.

​(Enter

your response as an

integer.​)

Some local conservatives blame​ Bongo's problems on the size of the government sector. They suggest cutting government purchases by

2525

billion Bongos. You are asked to evaluate the impact of such a reduction of government purchases on​ Bongo's income or national output.You estimate there will be a change in income​ =

nothing

billion Bongos.

​(Enter

your response as an integer and include a minus sign if

necessary.​)

Enter your answer in each of the answer boxes.

Answer 1