If an economy is experiencing an contractionary gap of 260 billion and the expenditure multiplier is 2, calculate how much government expenditures need to change to close the gap.

Q: If the spending multiplier is 2.5 and the economy is in a $500 billion contractionary gap, how much…

A: The contractionary gap means real GDP is less than the potential GDP such that that the economy is…

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: Assume that equilibrium real GDP is $ 800 billion, potential real GDP is $ 950 billion, the MPC is…

A: “Hey, since there are multiple subpart questions posted, we will answer first three subpart. If you…

Q: If the MPC in an economy is .8, government could close a recessionary expenditure gap of $200…

A: Answer: Given, MPC (Marginal Propensity to consume) = 0.8 Recessionary Expenditure Gap= $200 To find…

Q: Use the following information on economy X to answer the questions below. Consumption function: C =…

A: please find the calculations below.

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: If the marginal propensity to consume is 0.8, what is the spending multiplier?

A: please find the answer below.

Q: The spending multiplier, m, is 1/1 - MPC). a) ir the MPC is 0.9. what is the spending multiplier? b)…

A: Spending multiplier means how changes in spending lead to multiple times change in output or income…

Q: The spending multiplier, m, is 1/(1-MPC). a) If the MPC is 0.9, what is the spending multiplier? b)…

A: A multiplier is a numerical coefficient used in economics to illustrate how variations in total…

Q: The spending multiplier, m, is 1/(1-MPC). a) If the MPC is 0.9, what is the spending multiplier? b)…

A: Marginal Propensity to Consume is the proportion of an increase in income that gets spent on…

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

A: A contractionary gap or recessionary gap alludes to the contrast among potential and actual…

Q: You are given the following information about a closed economy with no government: Consumption =…

A: Given that, the economy is closed, and there is no government to operate the economy. Consumption an…

Q: You are given the following information about a closed economy with no government: Consumption =…

A: Autonomous spending means that it is not dependent on the level of income(Y). Therefore, we put it…

Q: The following graph shows the planned expenditure line (AE) for an economy where current equilibrium…

A: Equilibrium income = $400 Full employment income = $650

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: Explain the difference between the government purchases multiplier and the net tax multiplier. If…

A: Investment multiplier refers to the number of time income increases due to increase in the…

Q: (Simple Spending Multiplier) For each of the following values for the MPC, determine the size of the…

A: The simple spending multiplier indicates how much the total spending increase, given a change in…

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

A: Multiplier:Multiplier can be calculated as follows:

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

A: Real GDP is where demand and supply meets. athus, real GDP = $400 Billion  as potential GDP is less…

Q: If the spending multiplier is 2.0 and the economy is in a $540 billion contractionary gap, how much…

A: Given information: Spending multiplier = 2 Contractionary gap = $540 billion.

Q: If the spending multiplier is 2.5 and the economy is in a $600 billion contractionary gap, how much…

A: Contractionary gap is also called recessionary gap it  is a gap between actual output and potential…

Q: DERIVE the balance budget multiplier

A: When the change in government expenditure is equal to the change in taxes, then the budget is said…

Q: Explain the concept of the spending multiplier.

A: Spending Multiplier = 1/MPS or 1/(1-MPC)Where,MPS = marginal propensity to save that is the…

Q: For this question, assume AE = 900 + 0.75Y and the full-emloyment level of income is 4000. What is…

A: Recessionary gap is the gap between the level of real GDP and potential output, when the real GDP is…

Q: Suppose that there is an autonomous increase in investment spending of $20 billion and the MPC is…

A: Marginal propensity to consume is the change in consumption spending with change in disposable…

Q: Consider a hypothetical closed economy in which there are no income taxes. If households spend $0.75…

A: Hello. Since you have posted multiple questions and not specified which question needs to be solved,…

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: What is the effect on savings of a tax cut of $15 billion? Is this inflationary or deflationary?…

A: The marginal propensity to consume (MPC) measures the change in the consumption spending of…

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: Given C=500 + 0.80Y, I = 100, G=100, and the government decides to finance G by also increasing…

A: C=500 + 0.80Y I=100 G=100 T=100 tY=0.25Y

Q: Consider a closed economy without government Given C =100 + 0.8 Y and I = 80 a. Derive the AD…

A: Part a: AD = Total Demand = C + I  AD = 100 + 0.8Y + 80 = 180 + 0.8Y AD FUNCTION: 180 + 0.8Y In…

Q: Government expenditures represents one of the injections of expenditure. Explain how an increase in…

A: In the circular flow of economy, leakages reduce the flow of income in the economy and injections…

Q: Refer to the table on the next page in answering the questions that follow:a. If full employment in…

A: a) If the full employment is at 130 million of employment, the full-employment GDP is $700 billion.…

Q: If government spending rises by £500 million in an economy where the marginal propensity to spend is…

A: Marginal Propensity to spend or consume (MPC) represent that proportion of increase in income that…

Q: Q.2.3 Calculate the equilibrium level of income (Hint: use the multiplier method) Q.2.4 Calculate…

A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: You are given the following information for the economy of Datalink: C = 250 + 0.85Yd T = 150 + 0.5Y…

A: Disclaimer:- Since you have posted a question with multiple sub-parts, we will solve first three sub…

Q: Q.2.1 Calculate the level of autonomous spending in this economy. Q.2.2 Calculate the size of the…

A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: What is the spending multiplier for the north laurisian econom

A: According to research from 2020,Louisiana , the industry contributed $73 billion to the state's GDP…

Q: What will an increase in the tax rate cause? A decrease in the spending A multipliers An increase in…

A: In an economy, marginal propensity to tax refers to the proportion of income that is taken out to…

Q: calculate the expenditure multiplier, if the marginal propensity to consume = .80, the tax rate =…

A:

Q: What is the multiplier effect during a recession and full employment?

A: The multiplier effect describes how many times money poured into the economy multiplies itself to…

Q: Suppose an economy with the following characteristics. Y = Real GDP or national income T = Taxes =…

A: In an economy, the spending multiplier is also known as the expenditure multiplier that is…

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…