Assume the current equilibrium level of income is $200 billion as compared to the full-employment income level of $240 billion and that consumption is the only component of aggregate expenditures that depends upon the level of GDP. If the MPC is 5/8, what change in aggregate expenditures is needed to achieve full employment?

Q: Suppose the MPC is .90 and the MPI is .10. If government expenditures go up $ 100 billion while…

A: The expenditure multiplier shows the impact of change in autonomous spending on total spending and…

Q: Evaluating the relationship between R&D expenditures and net income is an example of the diagnostic…

A: Drill-down is an operation enabling a user to move from one point of data to another one in order to…

Q: Why can’t an economy with an MPC greater than 1 reach a stable equilibrium in the aggregate…

A: The marginal propensity to consume refers to the increase in consumption expenditure with an…

Q: Suppose two successive levels of disposable personal income are $16 and $21 billion, respectively,…

A: The marginal propensity to consume is a statistic that quantifies induced consumption, which…

Q: Assume MPC = 0.9, MPM = 0.3 and the Keynesian expenditure multiplier is 2, then the MPT must equal…

A: "The keynesian expenditure multiplier measures how a change in private consumption spending,…

Q: If the MPC In an economy Is 0.80, government could close a recessionary expenditure gap of $100…

A: Meaning of Money Multiplier: As from the word, the money multiplier refers to the situation under…

Q: Suppose that autonomous consumption is 2,190, government purchases are 590, taxes are 0, planned…

A: An autonomous spending depicts the parts of an economy's total use that are not influenced by that…

Q: Consider an economy in which investment is $200, government purchases are $500, net exports are $30,…

A: The following problem has been solved as follows:

Q: If there is a recessionary gap of $200 Billion and the MPC is .9, how much would government spending…

A: Hi. Since there are two questions, we will solve only the first one. 9. Recessionary gap is given by…

Q: Assume potential GDP is 3,500 and actual GDP is 3,050. If the consumption function is C=400+0.2Yd ,…

A: The aggregated, economy consumption function is mathematically represented as:  C = a + b (Y - T) .…

Q: If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of S80…

A: The marginal propensity to consumer (MPC) refers to the change in the change in the consumption…

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: suppose the government wishes to eliminate a recessionary GAP of 100 billion and the  MPC is .75.…

A: Recessionary gap is when the country's GDP is lower than its GDP at full employment level.…

Q: Numeric answer If Government (or Investment) spending is increased by $10 with MPC = 0.75, then the…

A: Government spending multiplier: - it is a fraction that shows the magnitude of the change in…

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

A:

Q: If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of $160…

A: Here, it is given that MPC is 0.8, which implies that an increase in income by 1 percent will lead…

Q: If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of S80…

A: Given data: MPC is 0.80 Expenditure gap is $80 billion

Q: The following are exogenous (not directly affected by income): G = 9 I = 14 X = M = 0 The…

A: We are authorized to answer one question at a time since you have not mentioned which question you…

Q: The total expenditure schedule in Macroland begins with these initial levels (in billions of…

A:

Q: If disposable income is 85 per cent of national income, the marginal propensity to consume (out of…

A: The measure which depicts the degree to which a consumer would in turn be spending or saving with…

Q: Consider an economy where the various components of expenditure follow these equations: C = 10 +…

A:

Q: If the MPC is .6 and the equilibrium GDP is $30 billion below the full employment GDP, then the size…

A: Recessionary expenditure gap = (Full employment GDP - Equilibrium GDP) / Multiplier, where…

Q: (simple spending multiplier) for each of the following values for the MPC. Determine the size of the…

A:

Q: Suppose that initially equilibrium income was 200 units and that this was also the full employment…

A: In Keynesian macroeconomics, when the price level in the economy is assumed to be fixed then the…

Q: Assume that the marginal propensity to consume is 0.75. The government wishes to increase the…

A: Given, Marginal propensity to consume (MPC) = 0.75 Recessionary output Gap = $100 billion Since the…

Q: Suppose a closed economy with no government spending or taxing is capable of producing an output of…

A: Consumption is the sum of Autonomous consumption and induced consumption. Autonomous consumption…

Q: For the data in the following table, the consumption function is C = 800 + 0.6(Y – T). Fill in the…

A: Planned aggregate expenditure in a closed economy is the sum of consumption, planned investment, and…

Q: net taxes were lowered from $5000 to $1000, the MPC is .75, and autonomous consumption spending is…

A: Disposable income refers to the remaining amount after paying all the necessary taxes.

Q: The expenditure multiplier implies that a dollar spent in the economy leads to. Select the correct…

A: Expenditure multiplier is the factor by which aggregate spending changes due to change in initial…

Q: Suppose that autonomous consumption is 1,500, government purchases are 500, planned investment…

A: We can find the equilibrium GDP by the following formula: Y = C + I + G + NX where,  Y is…

Q: Suppose that consumption equals $500 billion when disposable income is $0 and that each increase of…

A: The consumption function is the equation that shows the relation between consumption and the factors…

Q: Suppose that a certain country has an MPC of .9 and a real GDP of $400 billion. If its investment…

A: The total production of good and services across the sectors of economy in a particular period of…

Q: Consider an economy in which investment is $200, government purchases are $500, net exports are $30,…

A: The Fiscal policy is an effective tool to correct inflationary and recessionary pressure on the…

Q: The expenditure line is steeper than the 45-degree line. slopes upward because consumption depends…

A: Expenditure line is flatter than a 45 degree line. this is because for every increase in disposable…

Q: Assume that full-employment real GDP is Y = $1,200 billion, the current equilibrium real GDP is Y =…

A: Since the current real GDP ($1600) is greater than the full employment real GDP (at$1200); there is…

Q: Assuming that the MPC is 0.80, calculate the value of the government expenditures multiplier.

A: Given:- MPC=0.80 To calculate:- Government expenditure multiplier=? Please find the image attached…

Q: If an economy is in equilibrium when national income is $1000, and the level of autonomous…

A: The marginal propensity to consume is a metric that quantifies induced consumption, the concept that…

Q: Assume that government purchases decrease by $10 billion, with other factors held constant,…

A: The autonomous spending multiplier shows the change in national spending as a result of a change in…

Q: You are given the following information about a closed economy with no government: Consumption = 445…

A: Autonomous expenditures are those made by a government that are necessary and made regardless of the…

Q: Suppose that for a particular economy and period, investment was equal to 200 , government…

A: here we calculate the change in equilibrium income while change in taxation  by using the given…

Q: The following table shows consumption (C), investment spending (I), and government purchases (G), in…

A: If the income tax rate is 25%, the disposable income (after tax) is equal to 75% of the real GDP.…

Q: With consumption expenditure on the vertical axis and disposable income on the horizontal axis the…

A: A graph consisting of the consumption on the vertical axis and disposable income on the horizontal…