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Explain the basic idea of the expenditure multiplier and the role consumers' play
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- Exercise D24 Compare two policies: a tax cut on income or an increase in government spending on roads and bridges. What are both the short-term and long—term impacts of such policies on the economy?Please no written by hand solution 1. Explain the basic idea of the expenditure multiplier and also discuss the role consumer's play in determining its magnitude. (Minimum 150 words)Explain the basic idea of the expenditure multiplier and the role consumers' play.
- Chapter 14 Explain the basic idea of the expenditure multiplier and the role consumers play.The Expenditure multiplier occurs because A. a change in autonomous expensitures changes household incomes B) a change in autonomous expensitures causes real GDP to change in the opposite dirrection C) a change in households incomes changes autonomous expensitures D) any change in real GDP must also change the price level E) goverment expenditure on goods and services change by a proportional amount to government taxesAutomous consumption =100m Investment spending =100m Government spending 200milion Export =150 million Automous export =100 million Marginary propensity to consume =1/3 Taxes rate is 1/10 Marginary propensity to import 1/10 YF=2150 million Questions 1.1 culculate the level of Automous spending in the country 1.2calculate the size of multiplier 1.2 calculate equilibrium level of the income
- Suppose an economy with the following characteristics.Y = Real GDP or national incomeT = Taxes = 0.3YC = Consumption = 140 + 0.9(Y – T)I = Investment = 400G = Government spending = 800X = Exports = 600M = Imports = 0.15YGiven the information above, What is this economy’s spending multiplier?If the spending multiplier is 10, a S100 increase in government spending and Sl00 increase in taxes, will cause a inerease in GDP by 0 100 900 $1,000Only typed answer and please don't use chatgpt Why will temporary tax increase be insignificant in reducing consumption expenditures by the amount expected a. Because viewed the tax increase as permanent. b. Because people choose to increase their savings. C become people viewed taco increases temporarily d. Consumption expenditure are not related to level of taxtation
- a. Please explain the concept of the multiplier, including What information is required to calculate the spending multiplier b. List and explain the 3 different multipliers that we discussed. c. Explain in detail how the multiplier works to impact GDP. Be specific! Start with the injection of money into the economy and then how that affects household income and then spending via the mpc. Go on to discuss the rounds of spending, etc. and how the ultimate impact on gdp is amplified by the multiplier effect.1. Explain briefly how spending can multiply, and then calculate the spending multiplier when the MPC isa. 0.75 b. 0.8 c. 0.6Given the following information, S = -200 + 3Y I = 100 Calculate the national income equilibrium by using the Leakage-Injection Calculate the value of saving Draw the aggregate expenditure graph
