Q: Question 2 The IS-curve with the multiplier Y=¹[a b(rt-F)] ______ the baseline IS-curve Ỹ = a −b(rt…
A: 2) IS curve shows the negative or inverse relationship between income or GDP and interest rate.
Q: Question 3 Let the following equations characterize the U.S. economy: Supply of goods = Y = 6,000…
A: A - Disposable income = Y - t = 6000 - 600 = $ 5400
Q: You are given the following information about a closed economy with no government: Consumption = 115…
A: A closed economy implies the economy which does not trade with any other country and thus whatever…
Q: 10. Suppose the consumption function is represented by the equation: C = 500 + 0.6Y Simple…
A: MPC = coefficient of Y = 0.6 Multiplier = 1 / (1 - MPC) = 1 / (1 - 0.6) = 1/0.4 = 2.5
Q: If a $200 billion increase in investment spending creates $200 billion of new income in the first…
A: ∆Y=160 billion ∆I=200billion K=∆Y/∆I =160/200 =0.8 So mpc=0.8
Q: 1. A closed economy without a government has an aggregate autonomous consumer spending of 2000…
A: 1. Given A closed economy without a government. Aggregate autonomous consumer spending = 2000…
Q: The spending multiplier, m, is 1/(1-MPC). a) If the MPC is 0.9, what is the spending multiplier? b)…
A: A multiplier is a numerical coefficient used in economics to illustrate how variations in total…
Q: Problem 1. The following specifications are given for an economy: Consumption, C = 250 + 0.75…
A:
Q: True/False # There is an inverse relationship between the value of marginal propensity to save and…
A: # investment multiplier calculates the impact of investment spending whether it be public or private…
Q: In a closed economy with no government, a $1 billion increase in initial spending leads to a $5…
A: Multiplier effect occurs when change in aggregate spending leads to larger percentage change in Real…
Q: QUESTION 4 Suppose the real GDP in a fictional economy currently equals to 160 million USD, the…
A: According to the above mentioned question we have:- Equilibrium level of GDP = 160 million Potential…
Q: The spending multiplier, m, is 1/(1-MPC). a) If the MPC is 0.9, what is the spending multiplier? b)…
A: Marginal Propensity to Consume is the proportion of an increase in income that gets spent on…
Q: 1. Given the following information: C = 500 + 0.8 Yd, Ip = 300, G = 500, X = 500, T= 100 + 0.2 Y, M…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: An economy has a marginal propensity to consume of 0.5, and Y*, the income-expenditure equilibrium…
A: Since you have posted a question with multiple sub-parts, we will solve first three sub parts for…
Q: 3) If national disposable income increases by $20 million and consumption increases by $15 million,…
A: Marginal propensity to consume (MPC) is the change in the consumption due to change in income by $1.…
Q: Suppose an economy with the following characteristics. Y = Real GDP or national income T= Taxes =…
A:
Q: Assume in a simple economy that the level of saving is –500 when aggregate output equals zero and…
A: Given that The level of saving is –500 when aggregate output equals zero. The marginal propensity…
Q: If an increase in investment spending of $20 million results in a $200 million increase in…
A: An investment is an asset or item acquired for the purpose of generating income or valuation. The…
Q: In the economy of Spendsalot, the marginal propensity to save, MPS, is 0.8. What is the marginal…
A: Marginal propensity to save is the proportion of income saved.
Q: 5) If an increase in investment spending of $50 million results in a $400 million increase in…
A: Multiplier shows the change in the one factor to a change in the other related factors. It shows the…
Q: If the multiplier is 5 and investment increases by $3 billion, equilibrium real GDP will increase…
A: Macroeconomic equilibrium occurs when the quantity of real GDP demanded equals the quantity of real…
Q: C= 500 + 0,8Y, tax rate(t)= 0,25, G=1000 ve I= 1200. X= 500, M= 500 + 0,1Y. Calculate the…
A: In an economy, the investment multiplier explains the change in the income level due to changes in…
Q: APPLICATION: PROBLEM-SOLVING 8.1 (SHOW COMPLETE SOLUTIONS) Fill in the blanks in the table below.…
A: The marginal propensity to consume is the change in consumption due to a change in income. MPC=∆C∆Y,…
Q: Question 2 Not yet answered Flag question If investment expenditures decrease by $4 billion, causing…
A: Multiplier refers to the ratio of the change in real GDP with respect to the change in investment…
Q: You are given the following information about a closed economy with no government: Consumption =…
A: Here, given that the economy is closed with no government, there will be no net exports are recorded…
Q: 6. Suppose consumption is $10,000 when income is $9,000 and the marginal propensity to save equals…
A: The marginal propensity to save is the proportion of an increase in income that is not spent but…
Q: Q) For this question, assume the marginal propensity to consume is 0.7. a. Calculate the change in…
A: Public savings is the amount of savings which the government holds and Private savings is amount of…
Q: Question 13 The value of the Multiplier decreases in only one of the following cases: An increase in…
A: Multiplier is the ratio of change in income due to change in investment. Multiplier = ∆Y∆I…
Q: 13 of 25 Given the following information of a closed economy Saving = -50 + 0.25 Yd. Investment =…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: QUESTION 35 1 Q: 1- mpc + mpc t (Ca +I+G+X„) %3D 1 AQ 1- mpc + mpc ·t (ACa + AI + AG + AXn) |= 100,…
A: We have given following information I = 100, G = 200, Ca = 100, Xn = -100 MPC = 4/5 = 0.8 and…
Q: 2. Suppose the MPC = 0.6? What will be the government spending multiplier? If, in this economy,…
A: Here, it is given that the marginal propensity to consume of an economy is 0.67, which implies that…
Q: GDP, Billions Consumption, Billions $100 $120 200 200 300 280 400 360 500 440 600 520 700 600 c. Now…
A: Given the proportional tax = 10% We are required to find the new consumption schedule, MPC, and…
Q: 5. If the multiplier is 5 and investment increases by $3 billion, equilibrium real GDP will increase…
A: Hi! thankyou for the question but as per the guidelines, we answer one question at one time. Kindly…
Q: falls by $50 billion, then disposable income will increase by________ billion and consumption…
A: The proportion of an increase in income that is spent on spending is known as MPC. It is the most…
Q: marginal propensity to save
A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: c) Given the following economic models Y=C+I+G+ X-M C=1000+0.2YD- T=30+0.4Y I=100+ 0.15Y G = 40 X =…
A: NOTE: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…
Q: Assume a closed economy in which disposable income starts at 1,000 and increases by 500; consumption…
A: GDP is the value of final goods and services produced in the economy within a given period of time.
Q: In an economy with no government and no foreign sectors, autonomous consumer spending is $250…
A: Given: autonomous consumer spending (a) = $250 billion planned investment spending (I) = $350…
Q: Suppose an economy with the following characteristics. Y = Real GDP or national income T = Taxes =…
A: In an economy, the spending multiplier is also known as the expenditure multiplier that is…
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- In an economy with no government and no foreign sectors, autonomous consumer spending is $250 billion, planned investment spending is $350 billion, and the marginal propensity to consume is 2/3. c) What is Y*, income-expenditure equilibrium GDP? d) What is the value of the multiplier? e) If planned investment spending rises to $450 billion, what will be the new Y*?In an economy with no government and no foreign sectors, autonomous consumer spending is $250 billion, planned investment spending is $350 billion, and the marginal propensity to consume is 2/3. a) Plot the aggregate consumption function and planned aggregate spending. b) What is unplanned inventory investment when real GDP equal $600 billion? c) What is Y*, income-expenditure equilibrium GDP? d) What is the value of the multiplier? e) If planned investment spending rises to $450 billion, what will be the new Y*?Explain the multiplier intuitively. Why is it that an increase inplanned investment of $100 raises equilibrium output by morethan $100? Why is the effect on equilibrium output finite? Howdo we know that the multiplier is 1/MPS?
- Question 17 – Question 20: In this question, interest rate and prices are held fixed, and the economy can be described by the income-expenditure model. Consumption: C = 190 + 0.8YD; where YD = disposable income Investment: I = 180 – 50i, where i = 0.1 (10% & it is held fixed) Government spending: G = 183 Taxes: T = 272 Transfers: TR = 57 Exports: X = 18 Imports: IM = 24 Question 17 If the current level of output is 1975, find the levels of national savings and unplanned investment. Be sure to show your work rounded your answer to 2 decimal places if necessaryAssume an economy in which:(i) there are no exports and no imports,(ii) investors always want to spend $200 billion, or I = 200,(iii) government spends $500 billion and tax revenue is $200 billion,(iv) consumption is a linear function of disposable income, C=100+0.8YdAnswer the following questions:a. What is the marginal propensity to save (MPS)?b. What is the saving equation?c. What is the equilibrium level of national output/income (Y)?d. At the equilibrium income level (Y*, your answer to c) calculate private saving,and explain the relationship between private saving and planned investment?Refer to Figure 1. Injections = leakagesA) when income = zero.B) when consumption = saving.C) at equilibrium.D) when output = investment.
- I need help with question 4, especially with the graph. Please give a step-by-step on how to create the graph and the coordinates. I also need help with question 5. Suppose that the equation for autonomous planned spending, Ap , is Ap = 6,200 – 200r and the value of the multiplier, k, is 2.5. Derive the equation for the IS curve, Y = kAp . Graph the IS curve for interest rates between 0 and 8, with intervals of one-half of a percentage point. Suppose the equation for the LM curve is Y = 13,500 + 100r. Use this equation to explain the level of income at which there is a zero lower bound on the federal funds rate, the interest rate that the Fed controls. Graph the LM curve for interest rates between 0 and 8, with intervals of one-half of a percentage point. Suppose that the term premium is 1.0 percentage point and the risk premium is 2.0 percentage points. With Figure 5-11 as a guide, use the LM curve with the zero lower bound and the term premium and risk premium to graph the…If the mpc = 0.9, and Ip increases by $1,000 (meaning a change in Ip of $1000), then equilibrium income will increase by if the mpc = 0.8, the multiplier = [1], and if Ip falls by $5 million, then income will fall b If AD=$1,000 + 0.75YD, and the current level of output is $5,000, then the value of AD ________ are the inventories are __________ (increase/ decrease) C = $400 + 0.9YD If disposable income = $5,000, then the value of consumption (C) isAn economy has a marginal propensity to consume of 0.5, and Y*, the income-expenditure equilibrium GDP, equals $500 billion. Given an autonomous increase in planned investment of $10 billion, answer the following questions. a. What is the value of the multiplier? Value of the multiplier = b. What would you expect the total change in Y* to be based on the multiplier formula? Change in Y* based on the multiplier = billion c. What is the total change in real GDP after the 10 rounds? It may be beneficial to make a table on a separate sheet of paper to calculate the change in real GDP for each of the rounds, and then add up the values. Total change in real GDP (10 rounds) =
- TRUE/FALSE When we add the marginal propensity to import to our model, the spending multiplier falls. In fact, the higher the marginal propensity to import, the smaller the spending multiplier, all else constant.You are given the following information for the economy of Datalink: C = 250 + 0.85Yd T = 150 + 0.5Y I = 280 G = 400 X = 600 M = 100 - 0.125Y Determine the equilibrium level of income. What is the value of the multiplier? What is the level of consumption, government revenue and imports at the equilibrium level of income? If the government wishes to increase the equilibrium level of income by 200 to close a deflationary gap, by how much must government spending rise to achieve this? What is the government’s budget stance? Produce a sketch of your answers in (i) and (iv) above. Assume that this hypothetical economy is experiencing a severe recession, by how much would government spending have to increase to shift the aggregate demand curve rightward by GH¢ 2500. How large a tax cut would be needed to achieve this same increase in equilibrium income? Why does the tax cut not have the same effect as the increase in government spending?Suppose in a simple Keynesian economy, planned consumption function is given by C=250+0.65(Y-T). Planned investment, government purchases, taxes are $100 million, $100 million and $150 million respectively. 3. If government purchases increase to $150 million, what is the new equilibrium level of income? 4. What level of government purchases is needed to achieve an income of $2000 million? 5. From question e) you get the newly government purchase. Now find out the multiplier value 6. What is the amount of shift in AD curve? [Use the multiplier value from (5)]
