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How do I figure this out???
MPC is the marginal propensity to consume.
M)C is calculated as the change in consumption divided by the change in income.
So,
MPC = ∆C/∆Y
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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?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?Consumption function: C=500+0.8Yd , net tax: T=500, government spending: G=500, investment: I=1200, export: X=500 and imprt: M=700. According to this; Find the change in equilibrium level of output(Ye) if government spending increase 200. Use government spending multiplier.
- what is MPC, MPS and spending multiplier?Give typed solution only assume an economy has an MPC of .5 and their full employment level of output is $500 billion. If their current GDP is $600 billion, what could their government do to try ans correct this? a) decrease taxes by $50 billion b) decrease government spending by $50 billion c) increase government spending by $50 billion d) increase taxes by $50 billionBriefly discuss the following concepts iv. Government expenditure multiplierv. Potential output
- Only 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 taxtationYou are given the following information about a closed economy with no government:Consumption = 115 + 0.6YInvestment = 550Use the above information to answer the questions that follow:Calculate the value of autonomous spending. Calculate the value of the multiplier. Calculate the equilibrium level of income.C = 480 + 0.5YDI = 110T = 70G = 250 a. Calculate the private savings, public savings, and investment spending.b. Calculate the multiplier and explain how it affects equilibrium output.c. Suppose that the government decides to increase its spending from €250 billion to €300 billion. Find the equilibriumoutput, consumption, and disposable income. Why wouldthe government decide to expand fiscal spending?
- On a seperate sheet of paper, using AE model, graph the baseline economy and the scenario with the tax cut that results in an MPC of 0.85.Given the following closed economy model: C = .8Yd + 800I = 1000 G = 6000 T = .25Y + 100 Yf = 21,000 The size of the government spending multiplier (KDG) is: Round answer to one decimal place.C= 350+ 0.3 Y I^= 800 G^= 750 X^=610 Z= 550+0.4Y T= 0.15Y Yf= 2500 A) Calculate Multiplier B) Aggregate autonomous spending C) Equilibrium level of income D) Calculate change in government spending
