Q: Consider a hypothetical closed economy in which households spend $0.60 of each additional dollar…
A: Marginal Propensity to Consume (MPC) is the proportion of an increase in income that gets spent on…
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A: Money multiplier = 1 / (1-MPC)
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Q: If the MPC (Marginal Propensity to Consume) value of an economy is 0.8 then... a) Multiplier = 1.25…
A: MPC = 0.8 Multiplier = 1/(1 - MPC) Multiplier = 1/(1 - 0.8) - 1/0.2 = 10/2 = 5 The multiplier is the…
Q: If short-run equilibrium output equals 10,000, the income-expenditure multiplier equals 10, the mpc…
A: Here, given information is, Real output: 10,000 Income-expenditure multiplier: 10 MPC: 0.9…
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A: Aggregate Expenditure = Consumption + investment = government spending + net export
Q: Autonomous consumption = R100m Investment spending = R300m Government spending = R200 million…
A: Autonomous Consumption = 100 Investment Spending = 300 Government Spending = 200 Exports = 150…
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A: Change in consumption following change in income is called marginal propensity to consumer.
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A: Formula for MPS is MPS = 1 - MPC Formula for equilibrium income is Y = C + I + G + X - M
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Q: Suppose the following data for an economy; a consumption function of C = 800 + 0.8Yd, Investment…
A: Given, Consumption, C = 800 + 0.8 Yd Investment, I = 300 Government expenditure, G= 400 Taxes = T =…
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A: Since you have posted a question with multiple sub parts we will solve only first three sub parts…
Q: Assuming T = 0, for the following three consumption functions, i) identify the mpc and mps, iii) tax…
A: Marginal propensity to consume (MPC): - it is a fraction of the change in disposable income that is…
Q: Suppose the following data for an economy; a consumption function of C = 800 + 0.8Yd, Investment…
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A: Hello. Since you have posted multiple questions and not specified which question needs to be solved,…
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Q: Consider a hypothetical closed economy in which households spend $0.70 of each additional dollar…
A: The overall demand for all services and goods in an economy is known as "aggregate demand". Consumer…
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A: C = 250 + 0.85YD where the tax rate is 10%. autonomous investment expenditures are 140 billion…
Q: uppose output and income is equal to 16100, the marginal propensity to consume is 0.65, and…
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Q: Which of the following statements is TRUE?
A: The value of spending multiplier is dependent on MPC and as well as MPS
Q: Hello, I would like help on this assignment Thank you Assume there are 2 people Xavier with a…
A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…
Q: A company is growing rapidly, and is investing nearly all of its income, so its marginal propensity…
A: Disposable income refers to the income available to the people after the payment of tax and social…
Q: Refer to the accompanying figures, with consumption schedules in figure (A) and saving schedules in…
A: Suppose the disposable income is 100. Out of which, consumption is 75 and savings is 25. If there is…
Q: Assume that marginal propensity to consume is 0.75. autonomous consumption is 100 units (consumption…
A: Multiplier = 1 / (1 - MPC) = 1 / (1 - 0.75) = 1/0.25 = 4
Q: Suppose the economy's multiplier is 2. Other things equal, a $15 billion decrease in government…
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Q: Autonomous consumption = R100m Investment spending = R300m Government spending = R200 million…
A: since you have asked multiple questions and according to our policy we can only solve the first part…
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Q: 6 If the marginal propensity to consume (MPC) is 0.40, the expenditure multiplier will be equal to…
A: Marginal propensity to consume refers to the change in consumption due to the change in income.…
If the mpc = 0.9, and Ip increases by $1,000 (meaning a change in Ip of $1000), then equilibrium income will increase by
if the mpc = 0.8, the multiplier = [1], and if Ip falls by $5 million, then income will fall b
If AD=$1,000 + 0.75YD, and the current level of output is $5,000, then the value of AD ________ are the inventories are __________ (increase/ decrease)
C = $400 + 0.9YD
If disposable income = $5,000, then the value of consumption (C) is
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- Hello, I would like help on this assignment Thank you Assume there are 2 people Xavier with a Marginal propensity to consume (MPC) of 80% and Francis with a Marginal Propensity to save (MPS) of 10%. Xavier enjoys life and has a minimum consumption of $10,000 without any income, while Francis is more modest, with a minimum consumption of $7,500 without any income. Demonstrate and explain the income-expenditure model for Xavier and Francis on separate graphs with income ranging from 0 to $100,000 in $20,000 increments. Compare the minimum income levels where savings begins for Xavier and Francis. How does the difference in MPC affect the economies for each state? If the government decides to take all savings above $2,000, is this fair to Xavier? Francis? e. How might this change their behavior? How is this relevant to discussions about wealth inequality? How are individual choices relevant to wealth inequality?Suppose there is some hypothetical closed economy in which households spend $0.75 of each additional dollar they earn and save the remaining $0.25. The marginal propensity to consume (MPC) for this economy is (.25/.75/1/1.33/4) , and the spending multiplier for this economy is (.25/.75/1/1.33/4). Suppose the government in this economy decides to decrease government purchases by $250 billion. The decrease in government spending will lead to a decrease in income, creating an initial change in consumption equal to $_____ billion . This decreases income yet again, leading to a second change in consumption equal to $_______billion . The total change in demand resulting from the initial change in government spending is $ _______trillion. The following graph shows the aggregate demand curve (AD1AD1) for this economy before the change in government spending. Use the green line (triangle symbol) to plot the new aggregate demand curve (AD2AD2) after the multiplier effect takes place. For…Which of the following statements is correct? a) From an additional dollar of income the least consumers can spend is 1 cent. b) If from an additional dollar of income there is 0 additional consumption, then MPC is 1. c) If MPC is zero, the multiplier is 1. d) One is a multiplier.
- Suppose the following data for an economy; a consumption function of C = 800 + 0.8Yd, Investment spending is fixed at 300, Government purchases are 400, and net taxes are 100. A.) What is the MPC, MPS, and the value of the tax multiplier? B.) Suppose government increases taxes by 100, use the corresponding multiplier to calculate the new equilibrium level of income. C.) Check to ensure that the multiplier worked (confirm algebraically that your answer in B is correct, that is, solve for the new equilibrium level of income (Y)).Suppose there is some hypothetical closed economy in which households spend $0.65 of each additional dollar they earn and save the remaining $0.35. The marginal propensity to consume (MPC) for this economy is 0.65 , and the spending multiplier for this economy is 2.8571 . Suppose the government in this economy decides to increase government purchases by $350 billion. The increase in government spending will lead to an increase in income, creating an initial change in consumption equal to (blank). This increases income yet again, leading to a second chance in consumption equal to (blank) . The total change in demand resulting from the initial change in government spending is (blank) .Consider a hypothetical closed economy in which households spend $0.80 of each additional dollar they earn and save the remaining $0.20. The marginal propensity to consume (MPC) for the economy is______, and the spending multiplier for the economy is______. suppose the government in this economy decides to decrease the government purchases by $300 billion. The decrease in government purchases will lead to a decrease in income generating an initial change in consumption equal to______. This decreases income yet again, causing a second change in consumption equal to_______. the total change in demand resulting from the initial change in government spending is_____________. The following graph shows that aggregate demand curve (AD1) for this economy before the change in government spending. Use the green line (triangle symbol) to plot the new aggregate demand curve (AD2) after the spending multiplier effect takes place. Hint: be sure that the new aggregate demand curve (AD2) is parallel…
- Suppose there is some hypothetical closed economy in which households spend $0.85 of each additional dollar they earn and save the remaining $0.15. The marginal propensity to consume (MPC) for this economy is____ , and the spending multiplier for this economy is ____. Suppose the government in this economy decides to decrease government purchases by $300 billion. The decrease in government spending will lead to a decrease in income, creating an initial change in consumption equal to _____ . This decreases income yet again, leading to a second change in consumption equal to ____ . The total change in demand resulting from the initial change in government spending is ____.Assume there are 2 people Xavier with a Marginal propensity to consume (MPC) of 80% and Francis with a Marginal Propensity to save (MPS) of 10%. Xavier enjoys life and has a minimum consumption of $10,000 without any income, while Francis is more modest, with a minimum consumption of $7,500 without any income. a. Demonstrate and explain the income expenditure model for Xavier and Francis on separate graphs with income ranging from 0 to $100,000 in $20,000 increments. b. Compare the minimum income levels where savings begins for Xavier and Francis. c. How does the difference in MPC affect the economies for each state? d. If the government decides to take all savings above $2,000, is this fair to Xavier? Francis? e. How might this change their behavior? How is this relevant to discussions about wealth inequality? How are individual choices relevant to wealth inequality?47)Which one is TRUE? Select one: a. The larger the MPC, the smaller the multiplier. b. The multiplier is the ratio of the change in autonomous expenditure to the change in real GDP c. The real world multiplier is larger than the textbook multiplier when we take into account the impact of changes in GDP on imports, inflation and the interest rate. d. The real world multiplier is smaller than the textbook multiplier when we take into account the impact of changes in GDP on imports, inflation and the interest rate.
- Suppose there is some hypothetical closed economy in which households spend $0.85 of each additional dollar they earn and save the remaining $0.15. The marginal propensity to consume (MPC) for this economy is ___ , and the spending multiplier for this economy is ___ .Which of the following statements is TRUE? A. The spending multiplier is calculated as 1/MPC B. The proportion of any income that is spent rather than saved is called the spending multiplier C. MPC is always equal to MPS D. The value of the spending multiplier will increase if MPC increasesSuppose the MPC is .6 and consumption increases by $8 billion. Consequently, total income through the multiplier effect will: $8 billion $13.3 billion $15 billion $20 billion How do I calculate this?
