Assume the government cuts spending by Si billion and the marginal propensity to save was 0.1. a. What would be the effect on real GDP? (Show your work.)
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A: Autonomous saving= -300 Income=500 Consumption= 700
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A: MPC=1/MPS MPS=15-12=3 =1/3=0.3 Therefore MPC=0.3.
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A: Ans) Marginal Propensity to save= 0.4 Ans) Consumer Spending when the disposable income is $ 4…
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A: Given MPS = 0.4 Increase in government spending = 4000 $ Expenditure multiplier = 1 / MPS = 2.5
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A: Disposable income refers to the after-tax income. Savings equal the disposable income left over…
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Q: In the economy of Spendsalot, the marginal propensity to save, MPS, is 0.8. What is the marginal…
A: Marginal propensity to save is the proportion of income saved.
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A: Marginal propensity to consume (MPC) refers to the value of additional consumption due to increase…
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A: Marginal propensity to save (MPS): - it is a fraction of the change in income that is being saved.
Q: MPC and MPS) If consumption increases by $12 billion when real disposable income increases by $15…
A: MPC is nothing but then ratio of change in consumption to the change in real disposable income.
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A: MPC = 1-0.1 = 0.9 Therefore, the marginal propensity to consume is 0.9 Now, calculate multiplier =…
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A: Investment: It refers to the level of money invested by the government of an economy in a country.…
Q: Suppose that disposable income, consumption, and saving in some country are $400 billion, $350…
A: Introduction: Income remaining after deduction of taxes social security charges available to be…
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A: The given table, a) We know, GDP = C+S C = GDP-S So, At GDP = $480, S = -16, C= 480- (-16) C = 496…
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Q: If the marginal propensity to save is 0.2 in an economy, a $30 billion rise In Investment spending…
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Q: The government raises taxes by Rs. 100 billion. If the marginal propensity to consume is 0.6, what…
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- 10) Suppose net taxes are $50 billion. Government spending is $125 billion. Investment is $50 billion and consumption is $100 billion. What is national savings? A) 50 billion B) -50 billion C) 75 billion D) -75 billion.11 - : In an imaginary economy, if the disposable income is 200 and the consumption expenditure is 220, what are the savings? a) -20 B) -40 NS) -50 D) -10 TO) -30Topic: Fiscal Policy 1. A government collects $0.35 on every new dollar of income. Of the remaining $0.65 of disposable income, 20% is spent on imports, and 10% of the disposable income is saved. a. What is the marginal propensity to withdraw?b. How much of each new dollar of income is spent on domestic consumption?c. What is the spending multiplier in this economy?
- 1 a)What is the value added definition of GDP? What is meant by value added? b) Suppose that in a given year, a company spends € 400 million on intermediate goods, €800 million on wages of employees with no other expenses and makes total sales worth of € 1600 million. What is the value added of this company? c) The government wants to increase absolute savings and successfully incentivizes the people to save more (saving rate goes up). Show is a graph, what happens to equilibrium output. How could increase in savings lead to a paradox. 2.) a) What are the elements within autonomous spending? State the formula for the multiplier b)In the graph below, draw the demand function (Z) including autonomous expenditure. Label the area representing autonomous spending. Add the value of equilibrium output that you calculated in part c. ( images) c)Suppose the following characteristics of an economy: C = 150 + 0.4 YD , I = 270, G = 100, T = 50 Calculate the equilibrium output and mark it…2. In a closed economy with no government, a $1 billion increase in initial spending leads to a $5 billion increase in total income or output. a. What is the multiplier? b.What is the value of marginal propensity to save? c.What is the value marginal propensity to consume?49. What could increase investment spending? a) An increase in inflation. b) An increase in market rate of interest. c) An increase in business taxes. d) A decrease in the Index of Business Confidence e) A technological breakthrough creating new products or improving production efficiency
- A) What will be the new level of consumption at the $ 340 billion level of disposable income? B) What will be the new level of saving?Suppose the government borrows $20 billion more next year than this year. a. Use a supply-and-demand diagram to analyse this policy. Does the interest rate rise or fall? b. What happens to investment? To private saving? To public saving? To national saving? Compare the size of the changes to the $20 billion of extra government borrowing. c. Suppose households believe that greater government borrowing today implies higher taxes to pay off the government debt in the future. What does this belief do to private saving and the supply of loanable funds today? Does it increase or decrease the effects that you discussed in parts (a) and (b)?Question:Given that the marginal propensity to consume in a fully employed closed economy is 0.75, an increase in government expenditure of $1,000 million will increase the national income by:a. $0b. $750c. $4,000d. $7,500e. $8,000
- If, Autonomous Private Final Consumption Expenditure = $ 13,500, Exports = $ 5000 Government Final Consumption Expenditure = $ 6800 Government Investment Expenditure = $ 8900 Marginal Propensity to Import = 0.1, Marginal Propensity to Save = 0.25, Tax rate = 20% If Government increases its Investment Expenditure by $ 12,000, what is Marginal Propensity to Consume?1. Given the following on a closed economy.C = 40 + 0.8Yd C= consumptionI = 55 – 200r I= InvestmentG = 20 G = government spendingT = 20 T = TaxesYe = 400 Ye = National Income r = rate of interestDetermine the following:-The equilibrium level of consumption-The level of investment-The level of interest rate-The level of Private savings-The level of Public savings-The level of national savingsPlease see attachment Answer neatly Show all your work. Based on the above diagram: 1. Calculate MPC? 2. If Private Investment increases by 100, calculate the new level of NI. 3. If full-employment NI is at 3000, by how much should Government spending change? 4. What is the new NI, If 1/2 of those government expenditures are financed through taxes?
