An Economy has no imports or taxes, the MPC is 0.90 and real GDP is $12 trillion. If businesses increase investment by $0.1 trillion: 1. Calculate the multiplier? 2. Calculate the change in real GDP? 3. Calculate the new level of real GDP?

Q: MPC = .75   What is the value of the multiplier?

A: MPC=0.75 MPS=1-0.75         =0.25

Q: Using the above graph (assume RGDP amounts are in trillions of dollars), which policy would return…

A: Given multiplier = 4 Output gap = Actual output – potential output = 12 – 10 = 2 As there is…

Q: Level of investment goes up by 200. What happens with the level of GDP if you know that MPC = 0,8…

A: It is given that MPC=0.8 t=0.1

Q: Income and Expenditure Work It Out: Question 4 of 4 Recall that the consumption function is C = $100…

A: Equilibrium in the economy is reached where planned aggregate spending is equal to income.

Q: You are given the following information on the macroeconomy: Consumption:                 200 +…

A: Income (Y) can be calculated as follows. Equilibrium income is $2,125. From the above calculation…

Q: an increase in MPC, reduces the multiplier? true or fulse

A: The marginal propensity to consume is the concept which explains the increase in the consumption…

Q: Find the value of multiplier when MPC is equals to 0.70

A:

Q: If the expenditure multiplier is 2.5 and the government spending increases by $4 billion, what would…

A: Given: Expenditure multiplier = 2.5 Government spending = $4 billion

Q: Is the mpc in the multiplier .75?  only because multiplier is 1/(1-mpc) which would make sense for…

A: In the original question, MPS has given by stating "average households will save 25 cents of every…

Q: Table 2 shows elements in the national income accounts of an economy. Assume the economy is…

A: C) The marginal propensity to consume: MPC=change in consumptionchange in income Change in…

Q: The multiplier is related to the marginal propensities. The MPC is (directly, inversely) related to…

A: The multiplier is related to the marginal propensities. The MPC is directly related to the size of…

Q: Which of the following would be most likely to increase consumption spending? Select an answer and…

A:

Q: An economy has a marginal propensity to consume of 0.5, and Y*, the income-expenditure equilibrium…

A: Since you have posted a question with multiple sub-parts, we will solve first three sub parts for…

Q: Briefly define the following terms and explain the relationship between them: MPC . . . . . . . . .…

A: MPC is marginal propensity to consume,which is change in consumption/change in income. Multiplier is…

Q: Suppose the MPC is .80, the MPI is .10, and the income tax rate is 10 percent. What is the…

A: Given that, MPC = 0.80, MPI = 0.10 and income tax rate is 10 percent.

Q: In an economy without taxes and imports, an increase in investment of $50 billion increases…

A: Answer to the question is as follows :

Q: Calculate the Marginal Propensity to Consume and the Marginal Propensity to Save. Fill in the blanks…

A: Saving(S)If nation income (Y) is $9,000 and the consumption (C) is $8,000, then the saving (s) can…

Q: The value of the Multiplier decreases in only one of the following cases: O An increase in the…

A: Multiplier states the change in the variable due to  change in autonomous Variable.In terms of…

Q: If an increase in investment spending of $20 million results in a $200 million increase in…

A: An investment is an asset or item acquired for the purpose of generating income or valuation. The…

Q: In an economy the value of MPS is given as 0.72  Calculate the value of multiplier

A: We are given that the value of Marginal propensity to save is 0.72 We have to calculate the value of…

Q: Use the graph to answer the questions that follow. a.What is the value of the MPC? b.What is the…

A: MPC = Marginal propensity to consume MPS = Marginal propensity to save Multiplier = 1 / 1 - MPC…

Q: (Simple Spending Multiplier) For each of the following values for the MPC, determine the size of the…

A: The simple spending multiplier indicates how much the total spending increase, given a change in…

Q: If the multiplier is 5 and investment increases by $3 billion, equilibrium real GDP will increase…

A: Macroeconomic equilibrium occurs when the quantity of real GDP demanded equals the quantity of real…

Q: An economy has no imports and no income taxes, MPC is 0.9, and real GDP is $200 billion. Businesses…

A: Marginal Propensity to consume(MPC)=0.9 Real GDP=$200)Billion Increase in Investmnet=$10Billion…

Q: What would happen to the multiplier if the MPC were to fall? The multiplier would stay the same The…

A: Multiplier refers how much time money multiplied in market it depend on the level of consumption ,…

Q: Calculate MPC, MPS and the Multiplier if consumption expenditure increases by $4,000 as a result of…

A: MPS+MPC =1

Q: The multiplier (expenditure multiplier) is the ratio between which two measures? marginal propensity…

A: Multiplier: - it is a fraction that shows the magnitude of the change in national income due to a…

Q: a. What will the multiplier be given the MPS values below? Fill in the table with your answers. MPS…

A: A factor that, when being changed or increased leads to a change or increases in many other economic…

Q: If the value of multiplier is 32 find the MPC and MPS.

A:

Q: As the marginal propensity to consume (MPC) increases, As the marginal propensity to save (MPS)…

A: The formula is given as: Multiplier = 1/ (1-MPC) or 1/MPS

Q: In a certain economy, when income is $200, consumer spending is $145.  The value of the multiplier…

A: The marginal propensity to consume is the proportion of the disposable income that a person wants to…

Q: The marginal propensity to consume (MPC) is 0.75. The multiplier is (Round your answer to ane…

A: Gross domestic product (GDP) is the total market value of all final commodities manufactured in an…

Q: If changes to expenditures include consumption at $2000, investment at $600, government spending at…

A: Here, given information is: Consumption: 2000 Investment: 600 Government spending: 500 Exports: 100…

Q: As the MPC rises, the multiplier     falls     does not change     increases     falls by .05…

A: MPC is the marginal propensity to consume which is the percentage change in income spent on…

Q: Given an economy is currently producing at $1.2T rGDP, natural rGDP is $1.3T, and the MPC is 0.9,…

A: MPC is the marginal propensity to consume which is the percentage of change in income spent on…

Q: falls by $50 billion, then disposable income will increase by________ billion and consumption…

A: The proportion of an increase in income that is spent on spending is known as MPC. It is the most…

Q: What will an increase in the tax rate cause? A decrease in the spending A multipliers An increase in…

A: Multiplier effect is shows the multiplication of one varible due to change in another varible

Q: What is the multiplier effect? The multiplier is simply the ratio of the change in ( r G_ ) to the…

A: NOTE: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: Given an economy is currently producing at $1.2T rGDP, natural rGDP is $1.3T, and the MPC is 0.9,…

A: The output produced by the country is less than the potential output so there is a contractionary…

Q: What is the value of the MPC? b. WhatisthevalueoftheMPS? c. What is the value of the multiplier

A: “Since you have posted a question with multiple sub-parts, we will solve the first three subparts…

Q: In a closed economy without exports and imports, the marginal propensity to save increases and tax…

A: Multiplier refers to the situation where the number of times the level of income increases due to…

Q: The multiplier is Multiple Choice 1/(1 MPC. 1/MPS. 1/(1- MPS). 1/MPC.

A: The multiplier is defined as the change in income of the household to the permanent change in the…