Question 20 1 pts Germany is considered the leading economy of the Eurozone. In

Question

Question 20 1 pts Germany is considered the leading economy of the Eurozone. In 2006, it has a trade surplus with China and with the Southern countries of the Eurozone (Greece, Portugal, Spain). Germany economy is characterized by: C-100+ (4/5) YD: I-200, G-400, X -600, IM-300; T-600. Reference: 13 In order to offset the lower investment falling by 100, policy makers consider lowering taxes by 100. What will be the impact on GDP? GDP will increase by $100 GDP will increase by $400 GDP will increase by S1000 ? GDP will not change

Explanation / Answer

d) GDP does not change

0.2 Y = 220

Y = 1100

Lowering taxes and investment by 100; does not change the GDP; there is a change of approximately 20 which can be ignored

consumption changes from 500 to 580; as investment falls from 200 to 100

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