Q: If the consumption function is C - $250 +0.75(Y), the MPS is__, the government spending multiplier…
A: Here, we calculate the given as follow;
Q: G IM AE 200 200 200 s00 400 100 500 600 -100 200 500 400 150 Refer to the data above to answer this…
A: here we calculate the value of the Multiplier and choose the correct option so the calculation of…
Q: If government spending rises by $100, mps = 0.2, then the GDP multiplier is %3D O 5 O 4 O 1
A: Here, given information is: Change in government spending: $100 Marginal propensity to save (MPS):…
Q: If the simple spending multiplier is 8, the marginal propensity to consume is O a. 8 1/4 wered O c.…
A: The spending multiplier represents the change in the real gross domestic product or aggregate…
Q: Question 3 Given the following information: 1= 150, G = 150, T-150 and C = 150 +0.75(Yd) Which of…
A: Here, given information is, Investment (I): 150 Government spending (G): 150 Taxes (T): 150…
Q: An economy has a consumption function of C = 20 + 0.75(YD), taxes = 10+0.2(Y), investment equal to…
A: Real GDP is the monetary value of all good and services produced in the economy which is being…
Q: Suppose the consumption function in an economy is given by C(Y) = 100+0.6(Y-T), where Y represents…
A: The measure that depicts the relationship between gross national income and consumption level is…
Q: A reduction in the tax rate might lead to an increase in the growth rate of potential output if... O…
A: Generally a reduction in tax rate is considered the fiscal expansionary role of central government…
Q: When the general price level falls Selectione Oa. investment falls as a result of the real wealth…
A: The fall in the general price level leads to a change in the spending of the consumers which is…
Q: Consider an economy with no government, imports, or exports, and with fixed prices and interest…
A: The economics as a study is based upon the idea that the resources which the economies have are…
Q: If the average propensity to consume is 0.75, and the marginal propensity to consume is 0.70, if…
A: Change in Consumption=Marginal Propensity to Consume×Change in Income Spending Multiplier=11-MPC As…
Q: If the marginal propensity to consume is equal to 0.70 and income rises by $20 billion in an…
A: The marginal propensity to consume measures the change in consumption when there is a change in the…
Q: Assume that Equilibrium GDP is £4,000 billion. Potential GDP is £5,000 billion. The marginal…
A: Given Information Marginal propensity to consume (MPC) = 0.8Spending multiplier = 1/(1-MPC)…
Q: 34 64. If the marginal propensity to save (MPS) is small, O a. make the simple multiplier larger. O…
A: Multiplier =1/1-MPC or 1/MPS
Q: What are the two equivalent formulas for investment multiplier? O A. 1 and MPC 1- MPS OB. 1- MPC MPC…
A: We know that aggregate output in closed economy is given by Y = C+I+GWhere C =c+MPC×YSo Y=…
Q: Suppose that income increases by 17 units and the marginal propensity to save is 1/4 (i.e. 0.25).…
A: here we calculate the change in consumption by using the consumption function so the calculation of…
Q: Say, the expenditure multiplier for an economy is 2. An increase in government spending by $300…
A: here we calculate how much economy boost due to government expenditure , so the calculation of the…
Q: Refer to Exhibit 10-8. The multiplier is а. 5. b. 0.80. C. 4. d. 0.20. O e. 20.
A: The consumption is a function of disposable income and the increase in the consumption would be…
Q: 5. Suppose the following information represents current economic conditions and behavior in some…
A: Note: Since more than one questions are posted and no special request from the student, we are going…
Q: Given the data shown in the table below, if planned investment increased by $100, the new…
A: GDP is the value of all final goods and services produced in an economy over a given period of time.…
Q: Question 20 $60 O $40 + * $20 + $50 100 150 200 Disposable Income(Y) -20 Refer to the diagram. The…
A: The average propensity to consume (APC) is a measure of how much money is spent instead of saved.…
Q: Assume that the federal government is attempting to counter a negative shock through fiscal policy.…
A: The aggregate demand and aggregate supply in the economy determine the macroeconomic equilibrium.…
Q: 6. Does government borrowing crowd out private spending? Suppose a hypothetical economy is operating…
A: Full employment is what is going on in which all suitable work assets are being utilized in the most…
Q: 3. Suppose an economy with the following characteristics. Y = Real GDP or national income T= Taxes =…
A: The aggregate expenditure refers to the sum of all the expenditures tackle in the economy by the…
Q: If the multiplier is 4, what is the MPC? O 0.25 O 0.5 O 0.75 1
A: Given: Multiplier (k) = 4
Q: Assume that taxes depend on income and the MPC is 0.8 and tis 0.4. An increase in taxes of $10…
A: Calculate the tax multiplier as follows: Tax multiplier = -MPC/1-MpC +(MPC*t) =- 0.8/1-0.8+0.8*0.4 =…
Q: 3. True or false? - Argue graphically and provide intuitions in the two-period consumption-saving…
A: Given information 2-period consumption model 2 periods: Current period and future period Government…
Q: If the marginal propensity to consume is 0.8 and the government increases taxes by $1,000, the…
A: Answer (1) Given Information Marginal propensity to consume (MPC) is 0.8. And government…
Q: If, in an economy, a $200 billion increase in consumption spending creates $200 billion of new…
A: Marginal propensity to consume quantifies the induced consumption for every additional dollar of…
Q: 68. Consider the following consumption function C = 1100 + 0.6Yd What is the MPS? O a. 0.8 O b. 0.7…
A: Marginal propensity to save (MPS) is the fraction of an increase in income that is not spent and…
Q: Suppose that due to a fiscal stimulus, there is an increase in disposable incomes of $100 billion in…
A: Marginal propensity to consume defines what percentage of an additional dollar is spent on the…
Q: Real GDP Consumption (dollars) expenditure (dollars) 10 22.5 20 30 30 37.5 40 45 50 52.5 60 60 LAS…
A: The aggregate demand (AD) shows the negative relationship between the real GDP and price level. The…
Q: The closed economy of Sokovia has a GDP of 150 billion dollars and a marginal propensity to save of…
A: Multiplier shows that how much of the countries GDP (Y) changes in response to change in the…
Q: 32 14. If consumption function is given by : C= 100 + 0.8Yd , then MPS equal a. 0.8 O b. 8 O c. 2 O…
A: In Keynesian economic theory, the marginal propensity to save (MPS) refers to the proportion of an…
Q: If real GDP is $13 trillion and planned aggregate expenditure is $13.5 trillion, inventories will be…
A: [1] If real GDP is $13 trillion and planned aggregate expenditure is $13.5 trillion, then…
Q: The Congressional Budget Office estimates the size of the government purchases multiplier to be O A.…
A: Government purchases is the expenditure incurred by the government sector on the demand for final…
Q: TE 45° TE2=C+I2+G+(X-IM) TE:=C+I+G+(X-IM) AI:100 Y1 If the $100 increase in investment in Figure 9.1…
A: MPC defines how sensitive is the consumption with respect to income level . It is given as : ∆C / ∆…
Q: All Numbers are in $ Billion Output Consumption (Income) Spending 400 700 Net Investment Government…
A: Aggregate expenditure is calculated using the formula C+I+G+(X-M) C is consumption I is investment G…
Q: Use the diagram below to answer the question. O A OF O C ΟΕ Which point corresponds to level of…
A: Income of the individual can either be saved or consumed. So, Income = Savings + Consumption. Or ,…
Q: ual to 100 and the aggregate consumption function is given by C = 250 + 0.75Y. And suppose that, if…
A: In macroeconomics, the total demand(DD) for final goods & services in an economy in a specific…
Q: A $1.5 trillion increase in investment (a component of autonomous expenditure) leads equilibrium…
A: An increase in autonomous expenditure by $1.5 trillion leads to an increase in equilibrium…
Q: Assume MPC = 0.9, MPM = 0.3 and the Keynesian expenditure multiplier is 2, then the MPT must equal O…
A:
Q: Suppose two successive levels of disposable personal income are $13.8 and $18.8 billion,…
A: MPC ( marginal propensity to consume) is the share of increased disposable income that spend on…
Q: If the multiplier is 5, what is the MPC? O 0.20 O 0.50
A: The MPC (Marginal Propensity to Consume) is a crucial component of Keynesian macroeconomic theory.…
Q: Refer to the Table. The government spending multiplier in this economy is Planned Output Net (Income…
A: Government Spending Multiplier = 11-MPC or 1MPS where MPC is the marginal propensity to consume MPS…
Q: Which of the following would NOT lead to an increase in equilibrium Y*? Select one: O a. A downwards…
A: Y* is the sum of consumption spending, investment spending, government spending, and net exports.
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- We again assume asimple closed economy with GDP of 100 and:c0(autonomous consumption) = 20c1 (marginal propensity to consume) = 0.6I (investment) = 20.a) Now assume that c0falls by 5 (i.e. 5% of GDP), i.e. for any given level of output,consumption will fall by 5. Show the implied fall in the AD function in yourdiagram and show that output will fall by more than 5.b) Show that the multiplier is equal to 2.5, and hence that, in the new equilibrium,output will have fallen by 12.5 (i.e. by 12.5%)c) How big would the impact be if, say, c1 = 0.4 or c1 = 0.8? Explain the difference.Suppose that for a particular economy, for some time period, consumption was given by theconsumption function C = 300 + 0.9YD, investment was equal to 200, government expenditure wasequal to 100, net taxes were fixed at 100, exports were equal to 200, and imports were given by theimports function Z = 10 + 0.1YD. Note that YD represents disposable income. a.Suppose households earn $150 more in their disposable income. How much more would theyconsume in total? How much go to domestic goods and how much go to imported goods? Howmuch would they end up saving? b.What is the level of equilibrium income? What about the level of consumption and import? c.What are the values of the government spending multiplier, tax multiplier and balanced-budgetmultiplier? d.Suppose the investment level suddenly declined by 20. How should the government stabilize theeconomy? Please provide all options in detailSuppose we have the following consumption function in an economy C = 2000 + 0.9YD. Howmuch government spending has to be increased in order to have an increase in equilibriumoutput equal to 1000? a. 100.b. 200.c. 250.d. 1000.e. none of these.f. do not have adequate information.
- i need this in word not handwritten Q7. Assume that in 2015, the following prevails in the Republic of Nurd: Y = $200 G = $0 C = $160 T = $0 S = $40 I (planned) = $30 Assume that households consume 80 percent of their in- come, they save 20 percent of their income, MPC = 0.8, and MPS = 0.2. That is, C = 0.8Yd and S = 0.2Yd. Is the economy of Nurd in equilibrium? What is Nurd’s equilibrium level of income? What is likely to happen in the coming months if the government takes no action? 2. If $200 is the “full-employment” level of Y, what fiscal policy might the government follow if its goal is full employment? 3. If the full-employment level of Y is $250, what fiscal policy might the government follow? 4. Suppose Y = $200, C = $160, S = $40, and I = $40. Is Nurd’s economy in equilibrium? 5. Starting with the situation in part d, suppose the government starts spending $30 each year with no taxation and continues to spend $30 every period. If I remains constant, what…1. Show that equilibruim level of income is at a point where consumption plus investment schedules intersect the 45 degree line. 2. Suppose the level of autonomous investment in an economy is K200,000 and the consumption function is given below as c = 80+0.8Y, what will be the equilibrium level of income. 4.if MPcC is 0.8, what will be the increase in the level of income if investment is increased to K400,000. 5. What increase in investment is needed to raise the income by K4000, if MPC is 0.75? How much will be the increase in consumption and saving due to this increase in income. 3. Given the consumption level C= 50 + 75Y, if we assume autonomous investment is K200,000 at what level of income will savings become equal to investment?1. According to the Bureau of Economic Analysis, during therecession of 2007–2009, household saving as a fraction of dis-posable personal income increased from a low of just over1 percent in the first quarter of 2008 to 5 percent in the secondquarter of 2009. All else equal, what impact would this changein saving have on the MPC, MPS, and multiplier? How wouldthis change affect equilibrium output when planned invest-ment changes? 2. Assume in a simple economy that the level of saving is –500 whenaggregate output equals zero and that the marginal propensity tosave is 0.2. Derive the saving function and the consumption func-tion, and draw a graph showing these functions. At what level ofaggregate output does the consumption curve cross the 45° line?Explain your answer and show this on the graph.
- If Multiplier is 1/1-MPC and MPS+MPC=1, MPC= Marginal propensity to consume and MPS= marginal propensity to save. Using this formula and MPC is 0.9 multiplier is __________ and if MPS =0.4 multiplier is ________________ a 10 and 10 b 1 and 2.5 c 10 and 2.5 d 1.111 and 1.666Given Co = 400 and MPC=0.70 Find Consumption when Yd = 2000 and when Yd = 3000. Calculate Savings for both these levels of disposable income and consumption. Calculate MPS. Does MPS + MPC = 1? If autonomous consumption increases by $50. What is the multiplier? What is the change in total spending? Use a diagram to show which curve shifts and how.(a) 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. What is MPC, MPS and autonomous consumption Derive the saving function. What is the equilibrium level of income? Y= AD=C+I+G If government purchases increase to $150 million, what is the new equilibrium level of income? What level of government purchases is needed to achieve an income of $2000 million? From question e) you get the newly government purchase. Now find out the multiplier value What is the amount of shift in AD curve? [Use the multiplier value from e)] (b) In a self-regulating economy “X”, labor supply is 40 million but labor demand is 10 million. What will happen in goods and service market simultaneously? Explain this situation with relevant graph. Based on your findings in a) is it denoting long run equilibrium? If not, will the economy be able to restore…
- Suppose the consumption function is given by C(Y)=60+0.8(Y-T) where Y represents output and T stands for net taxes. Suppose further that the level of investment, I, is 400, the level of government expenditure, G, is 300, and net taxes, T, are 200. What is the equilibrium level of output in this economy? a. 1720 b. 3000 c. 1590 d. 7206. Suppose consumption is $10,000 when income is $9,000 and the marginal propensity to saveequals 0.1. When income increases to $9,500, consumption will be:(A) $8,500. (B) $10,450. (C) $10,500. (D) $10,050.Assume that the economy can be modeled as follows: AE = C + I + G C = 300 + .6Yd I = 400 G = 100 T = 200 y= 1700 consumption = 1200 4) What is the level of private saving in equilibrium? 5) What is the level of public saving in equilibrium? 6) What is the level of aggregate saving in equilibrium? 7) Imagine the government would like to increase equilibrium GDP to 2,000, what would it have to set the level of government spending to? 8) What is the size of the spending multiplier? 9) What is the size of the tax multiplier?