According to the text, a "multiplier" is used as an assessment and evaluation tool for several reasons. Which of the following is NOT a reason for using a multiplier? Seleet one: O 1. A multiplier represents the amount of times one dollar will be spent before it leaks out into the cconomy. 2. A multiplier is used to assess overall return on investment for one dollar spent. O 3. A multiplier is used to discount a future expenditure in terms of current dollars that needs to he spent. 4. A multiplier is used to evaluute the effectiveness of one event or property compured to another.
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Q: Y= C+I+G C= 500 + 0.8(Y-T) I = 300 G= 700 T= 0.25Y Refer to Table 27-1. What is the level of…
A:
Q: If investment increases by $100 and, as a result, gross domestic product (GDP) ultimately increases…
A: Change in investment=$100 Change in GDP=$200
Q: 69. Consider the following consumption function C = 1100 + 0.6Yd What is the simple multiplier? O a.…
A: The formula for the multiplier is as follows : Multiplier = 1 / 1 - MPC
Q: Disposable Income Consumption $400 500 800 1,000 1,200 1,500 1,600 2,000 2,000 2,500 2,400 3,000…
A: Disposable income: Disposable income is the total income that is available to an individual for…
Q: A consumer has $280 to spend on two commodities, the first of which costs $2 per unit and the second…
A: Given, total income = 280 Budget constraint: 2 x + 5 y = 280 Utility function: U(x, y) = 100 x 0.25…
Q: I: Investment; G: Government spending; EX: Exports; T: Taxes; and IM: Imports. Suppose that I+G+EX…
A: At equilibrium, Y = C + I + G + EX - IM I + G + EX = 25 IM= 15 Y= C + 25 - 15 Y= C + 10
Q: By how much will Y* increase, if an increase in consumer confidence causes the consumption function…
A: Dear student, you have asked multiple questions in a single post. In such a case, I will be…
Q: Aggregate planned expenditure decreases if O a. investment increases. O b. real GDP decreases. O c.…
A: Aggregate planned expenditure is computed as:
Q: 66. Consider the following consumption function C = 1100 + 0.6Yd What is autonomous consumption? O…
A: Autonomous consumption is being defined as the expenditures which the consumers must make even while…
Q: According to the Bureau of Economic Analysis, during the recession of 2007–2009, household saving as…
A: Since you have asked multiple question,wewill solve the first question for you.if you want any…
Q: Refer to the Information provided in Table 8.5 below to answer the questions that Table 8.5 A ggr…
A: In an economy, marginal propensity to consumer provide information about how much an individual or…
Q: 60. If Eman received a $1,000 increase in disposable income and her marginal propensity to save is…
A: Disposable Income = $1000 MPS (or Marginal Propensity to Save) = 0.15 Since, MPC + MPS = 1,…
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: QUESTION 4 If an increase of $5 billion in investment is associated with an increase of $50 billion…
A: Multiplier: It is defined as the number of times by which the income increases due to an increase in…
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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: (all data in real $ bn). On the graph below YO= 1782, Y1= 1868 and Y2 = 2018. If the initial…
A: Given: Y0=1782 Y1=1868 Y2=2018 Change in A=60
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A: Lord K.M.Keyes explains the relationship between consumption (C) and income (Y), it is known as the…
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A: Marginal propensity to save refers to the ratio of change in saving to change in income :-
Q: Derive the saving function and the consumption function. O A. S= - 800-0.25Y and C= 800 +0.75Y %3D O…
A: Saving function: S = a + bY When Y = 0, S = - 800 (vertical intercept = a), and MPS (b) = 0.25 S = -…
Q: QUESTION 32 Refer to the information provided in Table 9.2 below to answer the questions that…
A: Aggregate expenditure = Consumption spending + Planned investment spending + Government purchases
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A: Disposable income is the measure of cash that an individual or family needs to spend or save after…
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A: Given Price of good X (PX) = $2 Price of good Y (PY) = $5 Income (M) = $280 We know that Budget…
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
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A: Savings at retirement=Earning till retirement-Consumption till retirement
Q: Question 5 $60 $40- $20- $50 100 150 200 Disposable Income(Y) -20 Refer to the diagram. The average…
A: Disposable income is the sum of consumption and saving. Average propensity to consume is consumption…
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A: Marginal propensity to consume quantifies the induced consumption for every additional dollar of…
Q: If the Marginal Propensity to Consume is 80%, then the Consumption Multiplier is O 8 O 2 O 1.25 O 5…
A: Multiplier show the how much income will multiplied in the economy , so its depend upon the level of…
Q: C = 800 + 0.65 YD | = 750 G = 1500 T = 900 Refer to the information above. The multiplier for the…
A: By using the given terms we will calculate the multiplier which are as follow-
Q: Refer to problem 3. The spending multiplier is O 5 O 4 O 0.8 O 2
A: Spending multiplier = 1 / [1 - MPC] MPC = Chnage in consumption / Chnage in income
Q: 2. If disposable income is 4130, consumption is 2400, government spending is 431, and total taxes…
A: here we calculate the national savings by using the given information and choose the correct option…
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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 / ∆…
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A: Consumption is the spending or expense which is incurred for the purpose of utility by the consumer…
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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: 200 700 580 Refer to problem 1. Suppose that potential GDP is $740O, by how much investment should…
A: Given C = 600 + 0.8Yd I = 800 G = 600 NX = 0 T = 700.
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A: Government Spending Multiplier = 11-MPC or 1MPS where MPC is the marginal propensity to consume MPS…
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A: please find the answer below.
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- 12. Given this diagram of Consumption and Savings functions, What will be the level of savings at an income level of 60? 6. Given this diagram of Consumption and Savings functions, What will be the level of savings at an income level of 20? 07. Given this diagram of Consumption and Savings functions, What is the level of total desired consumption at income level of 80? 8. Given this diagram of Consumption and Savings functions, What is the level of "induced consumption" at income level of 407 Consider a model in which an individual lives only two periods. This person has diminishing marginal utility of consumption and receives an income of $20,000 in period 1 and an income of $5,000 in period 2. The private interest rate is 10 percent per period, and this person can borrow or lend money at this rate. Also assume that this person intends to consume all of his income over his lifetime. a. Give a hypothetical numerical example of what a person’s optimal consumption would be over these two periods. In answering this question, what assumptions did you make?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.
- You are an economic advisor to the government. Discuss your opinion . a) How COVID-19 pandemic will affect the consumption behavior as well as the investment done by the firms and household for the next two years? b) What are the actions or policies that the government can implement to face this situation? please answers with analysis and --graph (if possible)Q 1 5. Refer to the following intertemporal budget constraint of a respective consumer: a. How would this budget constraint change if individual becomes more presented oriented (he discounts future heavily)? b. How would this budget constraint change if individual faces a borrowing constraint in second period?Crusoe will live this period and the next period as the lone inhabitant of his island. His only income is a crop of 100 coconuts that he harvests at the begin- ning of each period. Coconuts not consumed in the current period spoil at the rate of 10 percent per period. (LO5) a. Draw Crusoe’s intertemporal budget constraint. What will be his consump- tion in each period if he regards future consumption as a perfect, one-for- one substitute for current consumption? b. What will he consume each period if he regards 0.8 unit of future consump- tion as being worth 1 unit of current consumption?
- please solve it completely. Bob has preferences over consumption in period 0 and 1 of the form U(x, y) = xy, where x and y are Bob's consumption in period 0 and 1 respectively. He has $15,000 in the bank now and is trying to decide between two different investment opportunities, A and B. A: invest $10,000 in period 0 and receive $20,000 in period 1. B: invest $2,000 in period 0 and receive $6,000 in period 1. If Bob can borrow and lend at a rate of interest of 50 percent, which investment opportunity will he choose? Given your answer in (a), how much will he consume in each period if the price of the good is $1 in both periods? Given your answer in (a), how much will he consume in each period if the price in period 0 is $1 and the inflation is 20%? Assuming that the price of consumption is $1 in both periods and the borrowing rate is 50% and the lending rate is 100%. Given your answer in (a), how much will he consume in each period?Limitless Ltd. is planning to buy a new warehouse to store its production output. The investment would require £500,000 to be paid upfront. Thanks to the new warehouse, the company expects to increase its profits by £120,000 annually for the next five years, and then £60,000 for the following five years. Calculate the Net Present Value (NPV) of this investment opportunity if the cost of capital is 12%. Should Limitless Ltd. go ahead with the purchase of the new warehouse? Explain your reasoning. What is the payback period of this investment? Suppose the Internal Rate of Return (IRR) of this investment opportunity is 15%. Based on this information alone, should Limitless Ltd. make the investment? Why? Would this decision be consistent with that from B? Explain your reasoning. Suppose that, instead of paying the initial £500,000 now, Limitless Ltd. decides to pay it in equal instalments over the next 10 years. How much would the company need to pay each year to make all…A consumer has $280 to spend on two commodities, the first of which costs $2 per unit and the second $5 per unit. Suppose that the utility derived by the consumer from x units of the first commodity and y units of the second is given byU(x,y)=100x0.25y0.75How many units of each commodity should the consumer buy to maximize utility? Compute the Lagrange multiplier λ and interpret in economic terms.
- 2. Mr. A has the following utility function and budget constraints: Max 0.1Ln(C1) + 0.7Ln(C2) Subject to S1 + C1 = 100 C2 + S2 = (1 + r)S1 where C1 and C2 are consumption level at young and that at old respectively. Likewise, S1 and S2 are saving at young and saving at old respectively. a) Find out Mr. A’s optimal consumption levels (i.e. C1*, C2*) and optimal savings (i.e. S1*, S2*) in terms of interest rate r. b) Show clearly the results in part a) in a suitable diagram (with C1 as x-axis and C2 as y-axis). c) Is Mr. A a saver ? or a borrower ? d) If r is equal to 0 (i.e. saving gives no returns), will Mr. A still choose to save when he is young (i.e. is S1 still bigger than 0) ? Why ? e) Suppose that Mr. A is not allowed to save (i.e. S1 = 0). What are his optimal consumption levels ? Show his optimal consumption levels in the same diagram you prepare for part a) (with a suitable indifference curve). f) If r increases,…Three students have each saved $1,000. Each has an investment opportunity in which he or she can invest up to $2,000. Here are the rates of return on the students’ investment projects: Student Return (Percent) Carlos 4 Felix 7 Janet 15 Assume borrowing and lending is prohibited, so each student uses only personal saving to finance his or her own investment project. Complete the following table with how much each student will have a year later when the project pays its return. Student Money a Year Later (Dollars) Carlos Felix Janet Now suppose their school opens up a market for loanable funds in which students can borrow and lend among themselves at an interest rate rr. A student would choose to be a lender in this market if his or her expected rate of return is than rr. Suppose the interest rate is 6 percent. Among these three students, the quantity of loanable funds supplied would be ,…Assume a consumer has current-period income y = 200, future-period income y′ = 150, current and future taxes t = 40 and t′ = 50, respectively, and faces a market real interest rate of r = 0.05, or 5% per period. The consumer would like to consume according to the following utility function: U (c, c′ ) = ln(c) + ln(c′ ). Show mathematically the lifetime budget constraint for this consumer. Find the optimal consumption in the current and future periods and optimal saving. Suppose that instead of r = 0.05 the interest rate is r = 0.1. Repeat parts (a) and (b). Does the substitution effect or the income effect dominate?