28. Over the business cycle, investment spending GDP. a. is more volatile than b. is inversely correlated with c. is less volatile than d. has about the same volatility as
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- What are the main components of measuring GDP with what is demanded?During a recession, does G or I fall more? Why? G = goverment spending I = investment spendingComment, on the likely outcome with sufficient arguments? a) Impact on GDP when, Interest rates have come down in the countryb) Impact on balance of payment, when there is a huge demand of vaccines produced in India in South Africa.c) Inflation rate in India reaches negative 2% (-2%)d) The aggregate demand falls short of aggregate supply in the economy
- Macroeconomics question: In an economy, the government wants to increase aggregate demand by $50 billion at each price level to increase real GDP and reduce unemployment. If the MPS is 0.4, then it could increase government spending by: A. $20 billionB. $10 billionC. $40.50 billionD. $31.25 billion44. Which component of GDP will increase if disposable income increases? a. Government spending b. Investments c. Consumption d. Net exportsGiven the following on a closed economy.C = 40 + 0.8Yd C= consumptionI = 55 – 200r I= InvestmentG = 20 G = government spendingT = 20 T = TaxesYe = 400 Ye = National Incomer = rate of interest Determine the following:a. The level of Private savingsb. The level of Public savingsc. The level of national savings
- The government decides to levy a lump-sum taxes by $50 billion which will reduce disposable income. If the MPS=0.25, what effect will this have on GDP?MPC and MPS measure changes in consumption expenditure and saving that result from changes ?. A. expected inflation. (b) disposable income. (c). expected future income. (d)governmente expenditure on goods and services.The Congressional Budget Office admits that its forecasts of next year’s GDP are off by an average of 0.5 percent. a. If the Congressional Budget Office makes its average error, by how much could it's estimate be off in a $18 trillion economy? $ billion b. If the Congressional Budget Office makes its average error, by how much could it's estimate be off in a $22 trillion economy? $ billion
- An increase in savings implies a decrease in consumption and therefore a decrease in GDP.True/False and Explain .the effect of gorvt spending in national income euation is to .... options : increase govt expenditure incraese national income incraese govt debt make is citizen crazyMacroeconomics: Assuming marginal propensity to consume is 0.5. If there is a shock to the economy that increases investment spending by 200 billion dollars what will the total Change to GDP be? (Ignore taxes and imports)