Explain the effects of the following actions on equilibrium income, assuming that the marginal propensity to consume is 0.8 A. Government purchases rise by $40 billion B. Taxes fall by $40 billion

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A: The effect of change in government spending on the national income is the government multiplier.

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A: Answer; = $ 90 billion

Q: If investment increases by $15 billion and the economy's MPC is 0.8, the aggregate demand curve will…

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Q: The government raises taxes by $100 billion. If the marginal propensity to consume is 0.8 What…

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Q: Suppose a government increases its purchases by $5 billion, and the marginal propensity to consume…

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A: We are going to find the change in consumption spending to answer this question.

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Q: Consider an economy described by the following equations: Y = C+I+G C = 100+0.75 (Y-T) I = 500-50r…

A: Hi, thank you for the question. As per our Honor code, we are allowed to attempt only first three…

Q: In a closed economy (i.e. without exports and imports), the marginal propensity to save increases…

A: MPS and MPC follows certain relation MPS+MPC=1 MPS=1-MPC MPC=1-MPS

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Q: If the Marginal Propensity to Consume is 0.8, this means that       For each $1 increase in…

A: Given MPC = 0.8 Multiplier = 1/MPS

Q: Suppose that the government increases taxes and government purchases by equal amounts. What happens…

A:

Q: can you please answer strating form D to F   Given the information below, answer the questions…

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Q: If the Marginal Propensity to Consume is 0.9, this means that       For each $1 increase in…

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A: Given:

Q: Suppose that the marginal propensity to consume is 0.8, and investment spending increases by $100…

A: Marginal propensity to consume: It is used to measure the income that is spent on consumption.

Q: Due to an increase in consumer wealth, there is a $40 billion autonomous increase in consumer…

A: Multiplier refers to the economic factor that amplifies increase or changed can lead to increase or…

Q: If output is above the level of spending balance, then A income will decrease. income will increase.…

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