O savings increase O savings decrease O GDP increases O investments decrease Question 10 Marginal propensity to save (MPS) is the O change in savings divided by change in disposable income
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- Assume: Y= C + I + G + NX C = 400 + (0.8)YD Io = 200 G = 300 + (0.1)(Y* - Y) YD = Y - TA + TR NXo = - 40 TA = (0.25)Y TRo = 50 Assume the equation for net exports changes from NXo= - 40 to NX1 = - 40 - mY. How would this affect expenditure multiplier, if we assume that 0 < m < 1?Table 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).For an economy the following functions have been given:C = 100 + 0.8YS = -100 + 0.2YI = 120 – 5rMs = 120Md = 0.2Y – 5rCalculate the following:5.1.1. IS equation 5.1.2. LM equation 5.1.3. Equilibrium level of income 5.1.4. Equilibrium level of interest rate. 5.1.5 Calculate National saving. 5.1.6 Calculate money demand 5.1.7 Find consumption
- The difference between planned and unplanned spending is Select one: O a. always negative O b. unplanned changes in inventories O c inventories O d. always positiveThe following table shows data for the economy before the decrease in saving. Suppose that the decrease in saving causes consumption to rise from $280 million to $320 million. Assume Say's law holds in this economy. Fill in the data for the economy after the decrease in saving. Before Saving Decrease After Saving Decrease Consumption (C) $280 million $320 million Investment (I) $200 million $ million Government Purchases (G) $250 million $ million Exports (EX) $500 million $500 million Imports (IM) $300 million $300 million As a result of the decrease in saving, total expenditures will .Suppose that consumer spending initially rises by $5 billion for every 1 percent rise in household wealth and that investment spending initially rises by $20 billion for every 1 percentage point fall in the real interest rate. Also assume that the economy’s multiplier is 4. b. In what direction and by how much will it eventually shift?
- 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.a)What will the multiplier be given the MPS values below? Fill in the table with your answers. Instructions: round your answers to 2 decimal places. MPS Multiplier 0.0 0.4 0.5 1.0 b) What will the multiplier be given the MPC values below? Fill in the table with your anwers. MPC Multiplier 1.0 0.9 0.75 0.5 0 c) How much of a change in GDP will result if firms increase their level of investment by $ 8 billion and the MPC is 0.80? ( Enter your answers as whole numbers) How much of a change in GDP will result if firms incresese their level of investment by $ 8 billion and the MPC instead is 0.67?Assume: Y= C + I + G + NX C = 400 + (0.8)YD Io = 200 G = 300 + (0.1)(Y* - Y) YD = Y - TA + TR NXo = - 40 TA = (0.25)Y TRo = 50 How do I calculate the multiplier? Thank you.
- Consumption function for a country; Let C = 100 + 0.75Y. Planned investments 1 = 200. In this case a) Find the equilibrium national income. b) Find the multiplier coefficient and interpret the meaning it expresses. c) Find the equilibrium consumption amount. d) Find the equilibrium saving amount. e) How much does the equilibrium national income change if i = 100? f) If C = 0.85, how would the equilibrium national income change? Explain. g) If C = 0.85, how would the equilibrium saving amount change? ExplainWe again assume asimple closed economy with GDP of 100 and:c0(autonomous consumption) = 20c1 (marginal propensity to consume) = 0.6I (investment) = 20.a) Now assume that c0falls by 5 (i.e. 5% of GDP), i.e. for any given level of output,consumption will fall by 5. Show the implied fall in the AD function in yourdiagram and show that output will fall by more than 5.b) Show that the multiplier is equal to 2.5, and hence that, in the new equilibrium,output will have fallen by 12.5 (i.e. by 12.5%)c) How big would the impact be if, say, c1 = 0.4 or c1 = 0.8? Explain the difference.a) Given Co = 400 and MPC = 0.70. Find Consumption when Yd = 2000 and when Yd = 3000. b) Given the consumption levels you found in part a), calculate Savings for both these levels of disposable income and consumption c) Calculate MPS d) Prove that MPS + MPC = 1 e) If autonomous consumption increases by $50. What is the multiplier? What is the change in total spending? f) Draw a diagram to show the effect of the multiplier in the economy? [Hint: What shifts and how?] Kindly answer this question correctly and type the answer here. Don’t give a handwritten answer on a page. And please answer it in 15 minutes. I will give you a thumbs up.
