Calculate the net cumulative change in aggregate expenditure if taxes were cut by $200 billion and MPC is estimated to be .75.  What if government expenditure was increased by $200 billion?   (Hint: Total change in expenditure = multiplier x new expenditure or spending injection)

Q: (Multipliers) Suppose investment, in addition to having an autonomous component, also has a…

A: It has been stated that investment has a component that varies directly with the level of real GDP…

Q: If the marginal propensity to consume equals 0.80, the tax rate equals 0.20, and the marginal…

A: Marginal propensity to consume is the proportion of change in income spent on consumption.Marginal…

Q: suppose the government wishes to illuminate recessionary of a gdp of 100 billion in the MPC is .075.…

A: To calculate increase in government spending we have to first calculate the spending multiplier.

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: In Altus, income rose by $80 billion over the past year. During the same period, its aggregate…

A: Here we calculate the MPE , MLR and multiplier by using the given information , so the calculation…

Q: Calculate MPS if we know that MPC Is 0.67

A: The information given is the value of Marginal propensity to Consume which is:- 0.67 We have to find…

Q: If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of $80…

A: A negative output gap also known as recessionary output gap is when the long run output exceeds the…

Q: Suppose the MPC = 0.6? What will be the government spending multiplier? If, in this economy,…

A: An increase in the government expenditure means increase in the national income of the country. The…

Q: Suppose MPC equals 0.9, government taxes 30% of all incomes, and the marginal propensity to import…

A: here we calculate the change in G, by using the relevant given information , so the calculation as…

Q: Suppose the interest on the debt was $700 billion. If interest is paid domestically, 90% will be…

A: Given: The total debt of the country is given as $700 billion  100% interest is paid domestically…

Q: An economy has a fixed price level, no imports and no income taxes.  MPC is 0.75 and real GDP is…

A: Given MPC= 0.75 Real GDP Y =$190 billion  Government expenditure is increased by $5 billion. Price…

Q: suppose the government wishes to illuminate recessionary GAP of 100 billion and the  MPC is .75. How…

A: The multiplier shows the change in real GDP as a result of a change in the autonomous expenditure.…

Q: Suppose the government seeks to achieve a balanced budget by levying taxes of $50 billion and making…

A: If MPC=0.8 then  MPS=1-MPC MPS=1-0.8 MPS=0.2

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: 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: 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: In a private closed economy where MPC= 0.8, if consumers reduce their spending by $20 billion and…

A: The macroeconomic equilibrium in an economy is determined by the aggregate demand and aggregate…

Q: Assume the simple spending multiplier equals 10.  Determine the size and direction of any changes of…

A: 1. If spending rises by $8 billion at each spending levelA real GDP rises by $80 billion (8*10)This…

Q: Calculate how much output would expand by if the government increased spending by $500 billion and…

A: Here, we see that the change in Government spending, dG=$500 billion, and the change in lump-sum…

Q: Calculate the net cumulative change in the aggregate expenditure if taxes were cut by $200 billion…

A: Marginal propensity to consume measures the proportion of extra income that is spent on consumption.…

Q: Consider a closed economy with a government.  Consumption is given by C = 1,000 + 0.6Yd   Further,…

A: Ans. Under a closed economy,  the equilibrium income is determined with the help of the…

Q: Given a MPC of 0.75, if consumer spending decreases by $300 billion, we would expect RGDP to…

A: MPC=0.75 Decrease in consumer spending=$300

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

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

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: Suppose the government reduces taxes by 50,000,000, that there is no crowding out, and that marginal…

A: Initially, due to the tax cut of 50,000,000 the spendings of people rose by the MPC (given as 0.9).…

Q: Use the graph to illustrate the effects of a $10 billion increase in government spending. Assume…

A: Spending multiplier is defined as changes in Real GDP due to change in one unit of autonomous…

Q: An Economy has no imports or taxes, the MPC is 0.90 and real GDP is $12 trillion. If businesses…

A: Answer: Given values: MPC(marginal propensity to consume)=0.90GDP=$12 trillionIncrease in business…

Q: Explain briefly how spending can multiply, and then calculate the spending multiplier when the MPC…

A:

Q: Calculate how much output would expand by if the government increased spending by $500 billion and…

A: Government spending multiplier = 1 / 1 - MPC MPC = Marginal propensity to consume  Change in…

Q: The investment multiplier is:     negatively related to the MPS.     positively related to the…

A: The investment function shows the positive relationship between investment and income. It means as…

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: 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: Illustrate how changes in investment (or other components of total spending) can increase or…

A: Multiplier – Multiplier means that a change in economic factor leads to a change in another economic…

Q: If an economy is experiencing an contractionary gap of 260 billion and the expenditure multiplier is…

A: Contractionary gap or recessionary gap refers to the situation where the level of output is less…

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 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: 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: The following graph shows the total expenditure line (TE) for an economy where current equilibrium…

A: Real GDP (350) is less than potential GDP (600), so there is a contractionary gap. To close the gap,…

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: In a private closed economy where MPC = 0.90, if consumers reduce their spending by $5 billion and…

A: Given the MPC = 0.90 Reduction in consumption = $5 billion Decrease in investment  = $4 billion

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: Describe the volatility of government spending and net exports relative to that of GDP and suggest…

A: The components of the GDP here, that is the government spending & the exports of goods &…

Q: he MPS is 0.1 and the income tax rate is 0.33 the multiplier is approximately

A: Given, Marginal Propensity to Save [MPS] = 0.1 Income tax rate = 0.33 The Marginal Propensity to…

Q: Suppose MPS=0.68 and MPI=0.17 19. What is the spending multiplier? 20. What is the level of real GDP…

A: Government spending refers to money spent by the public sector on the acquisition of goods and…