Three Macroeconomics questions summarized

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Macroeconomics
Marginal Propensity to Save (MPS)= 0.6
Change in autonomous spending= $4 million
Change in equilibrium GDP= Change in autonomous spending * multiplier (k)
To find a change in equilibrium GDP, find multiplier (k)
k= 1/(MPS)= 1/0.6
k= 1.667
Therefore, change in equilibrium GDP= ($4 million *1.667)
=$6.667 million
The U.S. government can use the following fiscal policies to improve the economic performance of the economy in case of a recession:
Government spending- during a recession there is a low demand for goods and services, and the level of unemployment is normally high. People do not have money to spend. The government may decide to spend money in a certain sector of the economy which was collapsing. The government would hope that this money is spent to purchase other goods and services. This would lead to a boost in the other sectors of the economy too (Rivera, n. pag.). However, a budget deficit presents a potential danger when using this fiscal policy tool. When the government increases its spending, it may cause a budget deficit. This may lead to higher taxes in the future to cover the deficit.
Business taxes- during a recession, the spending capacity of businesses is normally reduced significantly. The government may, therefore, decide to reduce the amount of taxes that businesses pay. Reduced taxes would mean the businesses have more to spend or invest. This would generally improve other sectors of the economy that are associated with the business (Rivera, n.

pag.). However, reducing taxes for businesses may lead to laxity at workplaces. This would reduce the productivity of the businesses. This may render this fiscal policy tool ineffective.
Individual taxes- during a recession, people have less money to spend. The government, therefore, has the option of reducing income tax on individuals. This is normally aimed at increasing the amount of money available to individuals hence increasing their spending capacity. More money would be available in the economy hence creating a boost (Rivera, n. pag.). A potential danger in using this fiscal tool is that it largely depends on consumers. If consumers have already lost confidence, then reduced taxes would be ineffective in increasing their spending. Difference between monetary policy and fiscal policy
Monetary policy refers to managing the supply of money in the economy and also interest rates. In the United States, this is done by the U.S. Federal Reserve. On the other hand, fiscal policy refers to spending and taxing activities by the government. The legislative and executive arms of government are in charge of this (Investopedia, n. pag.).
Works cited
Investopedia. “What’s The Difference Between Monetary Policy And Fiscal Policy?” Investopedia, 2018, https://www.investopedia.com/ask/answers/100314/whats-difference-between-monetary-policy-and-fiscal-policy.asp Accessed 25 July 2018.
Rivera, Andreas. “What Is Fiscal Policy?”. Business News Daily, 2018, https://www.businessnewsdaily.com/3484-fiscal-policy.html Accessed 25 July 2018.