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- 4. Assume a closed economy in which disposable income starts at 1,000 and increases by 500; consumption starts at 1,100 and increases by 300; investment spending is 1,000 and government spending is 500. The MPC is 0.6, The multiplier is 2.5, and The consumption equation is C = 500 + 0.6DI Equilibrium GDP is? A 3,500 B 3,000 C 4,000 D 5,000Table 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).Please see attachment Answer neatly Show all your work. Based on the above diagram: 1. Calculate MPC? 2. If Private Investment increases by 100, calculate the new level of NI. 3. If full-employment NI is at 3000, by how much should Government spending change? 4. What is the new NI, If 1/2 of those government expenditures are financed through taxes?
- 9. If the MPC is greater than zero but less than one, then we can be sure that when disposable income rises by P1 consumption will: a. not be affected b. will rise by more than P1 c. will rise by less than P1 d. will rise by exactly P1.6. Is the relationship between changes in spending and changes in real GDP in the multiplier effect a direct (positive) relationship or is it an inverse (negative) relationship? How does the size of the multiplier relate to the size of the MPC? The MPS? What is the logic of the multiplier-MPC relationship?1.In Figure 1, when disposable income is 0, how much is consumption, saving, autonomous consumption, and induced consumption? 2.In Figure 1, when disposable income is 2500, how much is consumption, saving, autonomous consumption, and induced consumption? 3.In Figure 1, when disposable income is 4,000, how much is the consumption, savings, autonomous consumption and induced consumption?
- Given Co = 400 and MPC=0.70 Find Consumption when Yd = 2000 and when Yd = 3000. Calculate Savings for both these levels of disposable income and consumption. Calculate MPS. Does MPS + MPC = 1? If autonomous consumption increases by $50. What is the multiplier? What is the change in total spending? Use a diagram to show which curve shifts and how.2. Suppose that consumption equals $500 billion when the disposable income is $0 and that each increase of $100 billion in disposable income causes consumption to increase by $70 billion. a. Draw a graph of the consumption function using this information. The axes must be labeled correctly, and the consumption function should have at least two points on the graph (correct coordinates). b. What is the Marginal Propensity to Consume in this economy? How did you arrive at your answer? Please show your work. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Complete the following table:a. Show the consumption and saving schedules graphically.b. Find the break-even level of income. Explain how it is possible for households to dissave at very low income levels.c. If the proportion of total income consumed (APC) decreases and the proportion saved (APS) increases as income rises, explain both verbally and graphically how the MPC and MPS can be constant at various levels of income.
- If Multiplier is 1/1-MPC and MPS+MPC=1, MPC= Marginal propensity to consume and MPS= marginal propensity to save. Using this formula and MPC is 0.9 multiplier is __________ and if MPS =0.4 multiplier is ________________ a 10 and 10 b 1 and 2.5 c 10 and 2.5 d 1.111 and 1.666Question 1: You are given the data concerning Freedonia, a legendary country i. C = 200 + 0.8Y ii. I = 100 a) What is the MPC to consume and what is the MPS? b) Solve for equilibrium income. c) Suppose I changes to 110, what is the new equilibrium level of income? By how much does a $10 increase in planned investment changes equilibrium income? What is the value of multiplier?14. Given this diagram; what is the level of I (investment spending)? 15. Given this diagram; what is the level of Xn (net exports)? 16. Given this diagram; what is the mpc (marginal propensity to consume?
