1. The Marginal Propensity to Consume (MPC) is: A. 0.50 B. 0.60 C. 0.70 D. 0.75 2. The Multiplier is: A. 2.5 B. 3 C.4 D. 5 3. The Fonilibrium level of National Inconme equals:
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- Assume the current equilibrium level of income is $200 billion as compared to the full-employment income level of $240 billion. If the MPC is 0.625, what change in aggregate expenditures is needed to achieve full employment? Multiple Choice a decrease of $12 billion an increase of $25 billion an increase of $10 billion an increase of $15 billionIn year 1, the level of production in an economy is recorded as R1000m and in year 2 it increases to R1800m. Over the same period the level of consumption spending goes from R150m to R550m. Calculate the marginal propensity to consume. (3) Calculate the marginal propensity to save. (2)Suppose the president is successful in passing a $5 billion tax increase. Assume that taxes are fixed, the economy is closed, and the marginal propensity to consume is 0.75. What happens to equilibrium GDP? There is a $20 billion increase in equilibrium GDP. There is a $20 billion decrease in equilibrium GDP. There is a $15 billion increase in equilibrium GDP. There is a $15 billion decrease in equilibrium GDP.
- Consider an economy with the following consumption function: C = 400 + 0.60YD, and investment function, I = 600. If the marginal propensity to consume increases by 0.05, what is the increase in equilibrium national income?Suppose that initially equilibrium income was 200 units and that this was also the full employment level of income. Assume that the consumption function is C=25+0.80YD and that, from the initial equilibrium level of income, we have now investment decline of 8 units? What will be the new equilibrium level of income? What increase in government spending would be required to restore income to the initial level of 200? Alternatively, what reduction in tax collection would be sufficient to restore an income level of 200?Suppose that in an economy with no government, the aggregate expenditure function is: AE = 50+0.75Y with an investment level of 100. i) Determine the level of planned expenditure when income is 150.
- During the 2012 fiscal year, households in an economy spent 80 per cent of their disposable income on consumption as well as GH¢300 consumption expenditure which is independent of income. Total government expenditure which stood at GH¢800 was supposed to be financed from a proportional tax levy of 50 per cent of national income and a VAT of GH¢100. Total private investment spending was made up of GH¢400 whereas export was GH¢400 and anautonomous import of GH¢500. Also, marginal propensity to import was 0.15 Determine the equilibrium national income for this economy.During the 2012 fiscal year, households in an economy spent 80 per cent of their disposable income on consumption as well as GH¢300 consumption expenditure which is independent of income. Total government expenditure which stood at GH¢800 was supposed to be financed from a proportional tax levy of 50 per cent of national income and a VAT of GH¢100. Total private investment spending was made up of GH¢400 whereas export was GH¢400 and anautonomous import of GH¢500. Also, marginal propensity to import was 0.15.1. Determine the equilibrium national income for this economy.2. Determine the consumption and savings levels at equilibrium national income.3. Find the size of the (expenditure) multiplier.4. Determine the new equilibrium level of income if government expenditure increases by GH¢70.5. If full employment output is 2000, what macroeconomic problem does this economy face? 6. In what direction should government expenditure change in order to achieve full employment output? 7. Determine…Table 2 shows elements in the national income accounts of an economy. Assume the economy is currently in equilibrium. Elements £ billions Consumption (total) 80 Investment 9 Government Expenditure 6 Imports 15 Exports 8 What is the current equilibrium level of income? What is the level of injections? What is the level of withdrawals? If national income now rises by £22 billion and as a result, the consumption of domestically produced goods rises to £80 billion. Calculate the marginal propensity to consume (MPC)What is the value of the multiplier? What is the value of the multiplier? Comment on the results in part (3) and (4).
- If the autonomous expenditure by the government increases by 7000 and the MPC is 0.2 find the level of new income in the economyAssume that the MPC is 0.9 and investment falls by $30 billion. What is the change in real GDP? Group of answer choices −$39 billion −$93 billion −$270 billion −$300 billion1. At an output level of $1200 billion there is an unplanned inventory change of 2. At an output level of $2000 billion there is a tendency for output To fall To either increase or decrease To remain constant To increase 3. At an output level of $2000 billion the value of saving is 100 billion Can’t be determined 200 billion 300 billion 4. The equilibrium level of output is……. Billion 5. At an output level of$2000 billion the aggregate expenditure is 6. At an output level of $1200 billion there is a tendency for output 7 at an output level of $2000 billion there is an unplanned inventory change of