In each of the following cases, calculate the values of MPC, MPW, and the spending multiplier. Enter your responses below rounded to 2cecimal places.a. A $6 million increase in income leads to a $900,000 rise in consumption on domestic items. MPC is thereforeand the spending multiplier is, MPW isb. A $8 million decrease in income results in a $0.8 million drop in consumption on domestic items. MPC is thereforeand the spending multiplier is|. MPW isc. A $4 million decrease in income causes a $3.2 milion drop in withdrawals. MPC is therefore1. MPW isand thespending multiplier is

In economics, the marginal propensity to consume (MPC) is defined as the proportion of an aggregate…

each of the following cases, calculate the values of MPC, decimal places. PW, and the spending multiplier. Enter your responses below rounded to 2 MPW is a. A $6 million increase in income leads to a $900,000 rise in consumption on domestic items. MPC is therefore [ and the spending multiplier is [ b. A $8 million decrease in income results in a $0.8 million drop in consumption on domestic items. MPC is therefore and the spending multiplier is( MPW is c. A $4 million decrease in income causes a $3.2 million drop in withdrawals. MPC is therefore spending muitiplier is [ MPW is and the

each of the following cases, calculate the values of MPC, decimal places. PW, and the spending multiplier. Enter your responses below rounded to 2 MPW is a. A $6 million increase in income leads to a $900,000 rise in consumption on domestic items. MPC is therefore [ and the spending multiplier is [ b. A $8 million decrease in income results in a $0.8 million drop in consumption on domestic items. MPC is therefore and the spending multiplier is( MPW is c. A $4 million decrease in income causes a $3.2 million drop in withdrawals. MPC is therefore spending muitiplier is [ MPW is and the

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 1.1P

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Suppose when income increases by $5,000, there is an increase in consumption of $3,000.a. Calculate the MPC (show your work)b. Calculate the MPSc. Calculate the simple spending multiplier (show your work)d. Now when the spending multiplier is the same as the one calculated in Q 4c and if there is adecrease in investment spending by $20,000.Will AD increase or decrease?Calculate the change in the AD. (Show your work)e. Show this change in AD and output on the following graph by shifting AD appropriately.
In an economy, autonomous consumption expenditure is $50 billion, investment is $200 billion, and government expenditure is $250 billion. Exports are $500 billion and imports are $450 billion. Assume that net taxes and imports are autonomous and price level is fixed. a)What is the consumotion function? b)What is the equation of the aggregate expenditure curve? c)Calculate equilibrium expenditure. d)Calculate the multiplier. e)If investment decreases to $150 billion, what is the change in equilibrium expenditure ?
1. Explain briefly how spending can multiply, and then calculate the spending multiplier when the MPC isa. 0.75 b. 0.8 c. 0.6
Explain the basic idea of the expenditure multiplier and the role consumers' play.
Q) Consider the multiplier model (in which the only component of expenditure that depends on income is consumption), and suppose that investment expenditures decrease by $50 million. All else equal, then the spending-balance level of output will A) increase by $50 million B) decrease by $50 million C) decrease by more than $50 million D) decrease by less than $50 million Explain it early and correctly
Based on the following information: C = 40 + 0.7Yd, T = Tg – R, I = 200, G = 350, Tg = 60, R = 40 calculate the equilibrium level of income (Ye). calculate the value of kG, kTg and kR, where k is the multiplier.. calculate the values of C, S and T at Ye level. calculate the new equilibrium level of income if I increases by 10 percent. if G increases to 550 units and it is fully funded by the rise in T, what is the impact on Ye? if Tg increases to 85 units and R increases to 50 units, what is the effect on the level of Ye? Given the following information. C = 600 + 0.8Yd , Yd = Y – T, Tg = 100, I= 200, R = 50, G = 350, X = 250 and M = 200 + 0.1Y. Calculate the equilibrium level of income (Ye). Show the equilibrium level of income by using diagrams of both aggregate expenditure-income (AE-Y) approach and injection-leakage approach, How much investment should be increased if the government wants to increase the national income by 2000? How much tax has to be reduced so that…
Table 2 shows elements in the national income accounts of an economy. Assume the economy is currently in equilibrium. elements billions Consumption (total) 80 Investment 9 Government Expenditure. 6 Imports 15 Exports 8 C) If national income now rises by £22 billion and as a result, the consumption of domestically produced goods rises to £80 billion. Calculate the marginal propensity to consume (MPC). D) What is the value of the multiplier? E) Comment on the results in part (c) and (d).
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