Determine the change in the equilibrium level of consumption (find ΔC) following a decrease in government spending from 400 to 300 (ΔG = -$100). A: positive 400$ B: negative 300 c: negative 400 D: positive 300

Determine the change in the equilibrium level of consumption (find ΔC) following a decrease in government spending from 400 to 300 (ΔG = -$100). A: positive 400$ B: negative 300 c: negative 400 D: positive 300

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter21: Fiscal Policy

Section: Chapter Questions

Problem 4SQ

See similar textbooks

Related questions

Q: Your consumption C is related to your disposable income by the equation, C = 200 + 3/5 Yd. Assume…

A: Consumption refers to buying goods or services for use by households. The consumption equation gives…

Q: Find the value of the multiplier when the value of MPC = 0.66

Q: 19 In this consumption function C= C0 + C1*Yd equation; C0 Known as Select one: a. Autonomous…

A: Autonomous consumption: It is the consumption expenditure that the consumers do when they have zero…

Q: Answer exercises 11-14 on the basis of the following information. Assume that equilibrium real GDP…

Q: Consumption (dollars) $1,200 2,100 3,000 Disposable Income (dollars) $3,000 4,000 5,000 2) Refer to…

A: We have the following information-

Q: Which of the following will not tend to shift the consumption schedule upward? Select one: a. A…

A: The consumption function shows the functional relationship between the consumption in an economy by…

Q: An economy has the following consumption function: C=$200+0.8DI . The government budget is balanced,…

A: The equilibrium in a macroeconomic model emerges when the aggregate demand for final goods , which…

Q: Consider the following function: C=100+0.7Y What is the average consumption when income is 200?…

A: Given information: C = 100 + 0.7Y Y = 200

Q: Consider the following. dQ 0.96 此 (x-24,999)0.04 * 225,000 (a) Use the marginal propensity to…

A: Given information MPC functiondQdX=0.96(X-24999)0.04 where X≥25000when X≤ 25000. fully X will be…

Q: Construct a consumption function from the data given here and determine the MPC. Given the…

A: Consumption function shows the relationship between disposable income and consumption.

Q: Given the import function, Z = 300 + 2/3Y, which of the following statements is correct? (a) The…

A: Import- The goods and services that are produced in foreign countries and purchased by residents of…

Q: Derive the expenditure multiplier using the lump sum taxes (or fixed sum)

A: The ratio of change in the GDP due to change in the taxes is known as the the multiplier. The…

Q: If the consumption function in an economy as follows C = 50 + 0.75Y and the following variables…

A: Given data: Consumption, C= 50+0.75Y Investment, I=250 MD Government expenditure (G)=200 MJD, Net…

Q: Question 1: If C=$400 + 0.75YD and Ip=$600, then the Equilibrium level of output is

A: Note: Since you have posted multiple independent questions in the same request, we will solve the…

Q: C = 400 + 0.80Y and I = 200, then the level of consumption at equilibrium income is equal to

A: Equilibrium level of income: Y = C + I + G + NX where, Y is the income C is the consumption I is…

Q: Answer the question on the basis of the information given in the following diagram: GuidelLine Agg.…

A: From the given graph, one can extract the information such that: Income (Y) is given as: 500…

Q: Find MPC in the given consumption function Y=100+0.8Y

A: The provided consumption function is: Y=100+0.8Y

Q: At equilibrium expenditure, unplanned change in inventories must be positive True False

A: Note: Since you have asked multiple questions, we will solve the first question for you. If you want…

Q: If a household’s income falls from R12 000 to R10 000, and its consumption falls from R9 500 to R8…

A: Marginal propensity to consume is the slope of the consumption function. Consumption refers to the…

Q: The following information is a three sector economy of a Consumption function (C) = 310 + 0.6Yd…

A: The expenditure approach calculates GDP as total spending on the physical volume of final goods and…

Q: Calculate the value of MPC if the multiplier is given to be as 1.4

A: The value of multiplier is given as:- MULTIPLIER = 1 / Marginal propensity to save Also we know…

Q: In an economy investment expenditure increased by 20 billion and the marginal propensity to consume…

A: As per the question, Increase in investment expenditure = 20 billion MPC or marginal propensity to…

Q: Consider a hypothetical closed economy in which households spend $0.75 of each additional dollar…

A: Here MPC = 0.75 And MPS = 0.25 Multiplier = 1 / MPS = 4 Now, Increase in government spending = 250…

Q: The multiplier is the ratio of the change in ________ to a change in ________. Select one: a. the…

A: The multiplier (K) can be calculated using the following formula.

Q: Given consumption function C = 0.6Y + 35 1) Find the equilibrium level of income Y for the planned…

A: Equilibrium level of income can be found by using this formula, Y = C + I

Q: Given consumption function C = 0.6Y + 35 1) Find the equilibrium level of income Y for the planned…

A: Equilibrium level of income Y = C + I

Q: The marginal propensity to consume is a)the average amount of income that is consumed or spent…

A: The measure that depicts in an economy the sensitivity of level of income to the changes occurring…

Q: Suppose governments increase spending for Social Security pensions. Explain why the increased…

A: Answer - Given in the question - Suppose governments increase spending for Social Security pensions…

Q: Find the equilibrium level of income and consumption if the consumption function is C = 0.2 Y + 20…

A: Here, consumption function is given as: C=0.2Y+20 And, investment (I) is given as 22.

Q: Assume that the Marginal Propensity to Consume (MPC) is 0.8. If the multiplier effect is taken into…

A: When Government expenditure will decreases it decreases the consumption as well so it reduce the…

Q: If a household’s income falls from R12 000 to R10 000, and its consumption falls from R9 500 to R8…

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

Q: The simple multiplier is: a) consumption spending divided by saving. b) one divided by one minus…

A: The simple multiplier is used to determine how much an initial change in aggregate demand affects…

Q: income, defined as the difference between income Y and taxes T. You observed that, after an increase…

A: Marginal propensity to consume states change in consumption due to change in income we can find the…

Q: Given: C = 1080 +.6Y T= 100 + .25Y TR = 0 1) Find the equation for YDISP 2) Find levels of…

A: Given, C = 1080 + 0.6Y T = 100 + 0.25Y TR = 0 ................. 1. Answer The equation for…

Q: Consider the following consumption function: C= 100 + 0.65YD- At what level of disposable income…

A: Given; Consumption function; C=100+0.65YD Desired level of savings= 0 Y=CD+SD where; Y=…

Q: Diminishing MRS reflects the notion that people prefer balance in their consumption choices.” True…

A: Substitution effect is the concept in which consumer chooses substitute of the product when it's…

Q: Suppose you know the following facts about consumer behavior of Amy in 2019. In a year, Amy…

A: The consumption function, often known as the Keynesian consumption function, is an economic formula…

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: If a household experiences an $880 increase in consumption with a $1,100 increase in disposable…

A: Marginal propensity to consume shows the fraction of additional income that is spent on consumption.

Q: Given the import function, Z = 300 + 2/3Y, which of the following statements is correct? (a) The…

A: Import refers to the situation that domestic country buying goods and services from the foreign…

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: The value of marginal propensity to consume(MPC) is 0.61 Calculate the value of multiplier

A: Before preceding to the explanation and numerical part for our problem, let's first understand what…

Q: The following are exogenous (not directly affected by income): G = 11 I = 4 X = M = 0 The…

Q: Find the value of aggregate supply with the consumption expenditure is given as $2000 and the saving…

A: Generally in the given question Consumption expenditure is given as = $2000 Saving is given as =…

Q: Construct a consumption function from the data given here and determine the MPC. Given the…

A: Year Consumer Spending($) Disposable Income($) 2014 1,200 1,500 2015 1,440 1,800 2016 1,680…

Question

Determine the change in the equilibrium level of consumption (find ΔC) following a decrease in government spending from 400 to 300 (ΔG = -$100).

A: positive 400$

B: negative 300

c: negative 400

D: positive 300

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

The marginal propensity to consume for this economy is …………. if income rises from $9000 to $10000 and consumption is rises from $750 to $1500 0.650. 0.750. 0.650 or 0.664, depending on whether income is $10,000 or $11,000. 0.800.
The MPC is Group of answer choices the change in consumption divided by the change in income. consumption divided by income. the change in saving divided by the change in income. the change in consumption divided by the change in saving.
Exhibit 8-2 Consumption functionAs shown in Exhibit 8-2, the marginal propensity to consume (MPC) is:
Find the value of the multiplier when the value of MPC = 0.66
Construct a consumption function from the data given here and determine the MPC. Given the consumption function in the above question, what is the relationship between disposable income and consumption?
If a household’s income falls from R12 000 to R10 000, and its consumption falls from R9 500 to R8 000, then: The marginal propensity to consume is ‐0.8. The marginal propensity to consume is 0.75. The marginal propensity to consume is 0.2. The marginal propensity to save is 0.15.
The potential GDP of the country is 380 billion euros, and the actual is 240. The marginal propensity to consume is 0.8. Determine the change in government expenditures to get to the equilibrium point:
Which of the following is correct? When the consumption function lies above the 45-degree line, households (a) spend on consumption a decreasing percentage of any increase in income.(b) save all of any increase in income.(c) are dissaving.(d) spend on consumption an increasing percentage of any increase in income. Give proper explanatations
The following information is provided in relation to the goods market: The consumption function is given as R450m + 0.75YD; Investment spending is R268m; Government spending is R150m; This economy follows a balanced budget approach; Calculate the equilibrium level of output in this economy. Show the formula and calculations.
Construct a consumption function from the data given here and determine the MPC. Given the consumption function in the above question, what is the relationship between disposable income and consumption? Is it direct or indirect and then explain what it means.
Determine equilibrium levels of income and consumption for the following functions. a.C=20+0.75y,I=20, b.C=50+0.60y and I=30.where C&I, are consumption and investment respectively in billions of naira