If a spending shock reduces aggregate expenditure by $600 million and the multiplier is 2.5, then the IS curve will shift: right by $240 million. left by $1,500 million. left by $600 million. right by $600 million.
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- If government purchases increase by $20 billion and aggregate demand shifts rightward by $30 billion as a result, we can conclude that: Question 32 options: the spending multiplier is 3.00 the MPC for this economy is 0.33 the MPW for this economy is 0.33 unemployment is rising the spending multiplier is 2.00The aggregate demand multiplier effect says that an initial increase in expenditure plans leads to an induced Group of answer choices increase in exports. decrease in the price level. increase in production expenditure. increase in government expenditures on goods and services. increase in consumption expenditure.Assume the simple spending multiplier equals 10. Determine the size and direction of any changes of the aggregate expenditure line, real GDP demanded, and the aggregate demand curve for each of the following: Spending rises by $8 billion at each spending level Spending falls by $5 billion at each income level Spending rises by $20 billion at each income level
- If planned aggregate spending rises by $10 billion and the marginal propensity to consume is 0.75, then equilibrium real GDP changes by:Assume the marginal propensity to consume is 0.8. If consumer spending rises by $20 billion, then total income through the multiplier effect will: Increase by $100 billion Decrease by $100 billion Increase by $10 billion Will not change How do I calculate this?In an economy with no government and no foreign sectors, autonomous consumer spending is $250 billion, planned investment spending is $350 billion, and the marginal propensity to consume is 2/3. a) Plot the aggregate consumption function and planned aggregate spending. b) What is unplanned inventory investment when real GDP equal $600 billion? c) What is Y*, income-expenditure equilibrium GDP? d) What is the value of the multiplier? e) If planned investment spending rises to $450 billion, what will be the new Y*?
- If the multiplier coefficient is 5, by what amount does real GDP output have to increase or decrease in order to restore equilibrium if investment spending increases by $4 billion? A) 10 billion decrease. B) 9 billion increase. C) 20 billion increase. D) 1 billion decrease.The Italian government decides to stimulate the economy by sending checks worth $70 billion to Italian consumers. If the government spending multiplier is 1.5 , calculate the MPC to determine the final change in Italy's real GDP due to the transfer. Please give your answer as a whole number in billions of dollars. $ billion The Greek government decides to introduce new austerity measures, which reduce government direct spending by $16 billion. Greece has a marginal propensity to consume of 0.6 . What will be the final change in real GDP as a result of this decreased spending? Please give your answer as a whole number in billions of dollars. The Japanese government decides to stimulate the economy by increasing direct spending by $70 billion. If the final change in real GDP is $280 billion, what is Japanese consumers' marginal propensity to consume (MPC)? Please round your answer to two decimal placesA high marginal propensity to save means ? (a) lower multiplier (b). Higher is the investment spending (c). Higher is the equilibrium income (d). A higher level of aggregate demand (e). A high level of exports
- Given C=500 + 0.80Y and I = 100 and C and I are the only components of AD. Based on the equilibrium level of output above, how much of it came from induced consumption spending?Based on the multiplier model, the equilibrium level of output will be equal toHow much is the value of the expenditure multiplier?Suppose that the marginal propensity to consume is 0.8, and investment spending increases by $100 billion. The increase in aggregate demand is:An economy is currently in equilibrium. The following figures refer to elements in its national income accounts. A) If national income now rises by £12 billion, and as a result, the consumption of domestically produced goods rises to £68 billion. Calculate the marginal propensity to consume (MPC). B) What is the value of the multiplier? C) Comment on the results in part (a) and (b).
