Income is 678 Trillion and consumption is 662 Trillion then income increases to 698 Trillion and consumption increases to 677 Trillion. What will the marginal propensity to consume be? .8 Using the information and the calculations from question seven what will the multiplier be 4 Using the information and the calculations from questions seven and eight and given a full employment level of aggregate expenditure GDP of 600 and a current level of aggregate expenditure of 560 how much would government spending have to change to regain the full employment level of GDP Increase in government spending of 8 Decrease in government spending of 8 Increase in government spending of 10 Decrease in government spending of 10 None of the above Using the information and calculations form questions seven, eight, and nine how much would government taxes have to change by in order to regain the full employment level of GDP Increase taxes by 8 Lower taxes by 8 Increase taxes by 10 Lower taxes by 10 None of the above
Income is 678 Trillion and consumption is 662 Trillion then income increases to 698 Trillion and consumption increases to 677 Trillion. What will the marginal propensity to consume be? .8 Using the information and the calculations from question seven what will the multiplier be 4 Using the information and the calculations from questions seven and eight and given a full employment level of aggregate expenditure GDP of 600 and a current level of aggregate expenditure of 560 how much would government spending have to change to regain the full employment level of GDP Increase in government spending of 8 Decrease in government spending of 8 Increase in government spending of 10 Decrease in government spending of 10 None of the above Using the information and calculations form questions seven, eight, and nine how much would government taxes have to change by in order to regain the full employment level of GDP Increase taxes by 8 Lower taxes by 8 Increase taxes by 10 Lower taxes by 10 None of the above
Chapter9: The Keynesian Model In Action
Section9.4: Recessionary And Inflationary Gaps
Problem 1YTE
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Question
- Income is 678 Trillion and consumption is 662 Trillion then income increases to 698 Trillion and consumption increases to 677 Trillion. What will the marginal propensity to consume be?
- .8
Using the information and the calculations from question seven what will the multiplier be
- 4
- Using the information and the calculations from questions seven and eight and given a full employment level of aggregate expenditure
GDP of 600 and a current level of aggregate expenditure of 560 how much would government spending have to change to regain the full employment level of GDP
- Increase in government spending of 8
- Decrease in government spending of 8
- Increase in government spending of 10
- Decrease in government spending of 10
- None of the above
- Using the information and calculations form questions seven, eight, and nine how much would government taxes have to change by in order to regain the full employment level of GDP
- Increase taxes by 8
- Lower taxes by 8
- Increase taxes by 10
- Lower taxes by 10
- None of the above
Expert Solution
Step 1
Marginal propensity to consume (MPC) refers to the level of additional consumption expenditure due to increase one more unit of income.
Step 2
Marginal propensity to consume can be calculated as follows.
MPC is 0.75.
Multiplier is 4 (1/(1-0.75)).
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