Answer question 7 * Question Completion Status:Moving to another question will save this response.Question 7A firm spends an additional £150 million on investment projects in 2012. How will this impact the national income, if the multiplier is 2?O National income will increase by £350 millionO National income will increase by £300 millionO National income will increase by 150 millionNational income will increase by £50 millionA Moving to another question will save this response.O000

Gross Domestic Product (GDP) refers to the value of final goods and services produced within the…

Answered: A firm spends an additional £150…

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 5.10P

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Similar questions

a)What will the multiplier be given the MPS values below? Fill in the table with your answers. Instructions: round your answers to 2 decimal places. MPS Multiplier 0.0 0.4 0.5 1.0 b) What will the multiplier be given the MPC values below? Fill in the table with your anwers. MPC Multiplier 1.0 0.9 0.75 0.5 0 c) How much of a change in GDP will result if firms increase their level of investment by $ 8 billion and the MPC is 0.80? ( Enter your answers as whole numbers) How much of a change in GDP will result if firms incresese their level of investment by $ 8 billion and the MPC instead is 0.67?
Assume an economy can be modeled with these equations: C = 210 + b Yd, I = 200, G = 103 - 0.054 Y, X = 280 M = 305 and T = -40 + 0.29Y. What is the value of b when the multiplier on Investment is 1.867? the answer is 0.73
With following values, c = 0,7, t = 0,41 and m = 0,86 use the multiplier and calculate the potential impact of the President’s R791 billion infrastructure investment plan on the value of GDP in 2021.
An increase of R5 billion in income in a macroeconomy leads to an increase in R3billion in consumption spending. From this information, we can determine that themarginal propensity to save in this economy is:choose the correct answer(a) 0.6; (b) 0.5;(c) 0.3; (d) 0.4
Yd Consumption Expenditure $ 0 $ 6,000 $ 10,000 $ 14,000 $ 20,000 $ 22,000 $ 30,000 $ 30,000 $ 40,000 $ 38,000 $ 50,000 $ 46,000 Calculate MPC, MPS, and Multiplier How much equilibrium level of income will increase by if autonomous Investment of $4,000 was made?
C= 500 + 0,8Y, tax rate(t)= 0,25, G=1000 ve I= 1200. X= 500, M= 500 + 0,1Y. Calculate the multiplier for I(investment).
N6 Given the MPC = 0.60 and the potential output is $700 billion, calculate the government expenditure multiplier
If the spending multiplier is 10, a S100 increase in government spending and Sl00 increase in taxes, will cause a inerease in GDP by 0 100 900 $1,000
Suppose that investment demand increases by $100. Assume that households have a marginal propensity to consume of 80 percent. Compute the first three rounds of multiplier effects as follows: a) What are the first cycle changes in spending? Total cumulative change equals? b) What are the second cycle changes in spending? Total cumulative change equals? c) What are the third cycle changes in spending? Total cumulative change equals?
Consumption function for a country; Let C = 100 + 0.75Y. Planned investments 1 = 200. In this case a) Find the equilibrium national income. b) Find the multiplier coefficient and interpret the meaning it expresses. c) Find the equilibrium consumption amount. d) Find the equilibrium saving amount. e) How much does the equilibrium national income change if i = 100? f) If C = 0.85, how would the equilibrium national income change? Explain. g) If C = 0.85, how would the equilibrium saving amount change? Explain
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 an economy with the following characteristics.Y = Real GDP or national incomeT = Taxes = 0.3YC = Consumption = 140 + 0.9(Y – T)I = Investment = 400G = Government spending = 800X = Exports = 600M = Imports = 0.15YGiven the information above, What is this economy’s spending multiplier?

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