The practical significance of the spending multiplier is that it:     Question 54 options:   helps to stabilize the economy   minimizes the unemployment rate   magnifies initial changes in spending into larger changes in real output   brings about an equality of injections and withdrawals   keeps inflation within tolerable limits

Q: Which of the following measures will enable the government to close a contractionary gap of -20,000…

A: Consumption analysis serves as a yardstick for assessing how scarce resources are used, the reason…

Q: Assume that the full-employment level of output is $1,000 and the price level associated with…

A: The expenditure multiplier effect measures the impact that a change in autonomous spending will have…

Q: A decrease in government purchases of $2 billion leads to an initial $1.1 billion decrease in…

A: Please find the answer below.

Q: The change in aggregate demand that results from fiscal expansion changing the interest rate is…

A: Crowding out Effect states that government spending is increased in order to balance the reduction…

Q: The principle of the multiplier states that:     any increase in aggregate spending that causes…

A: Multiplier: - it is a fraction that shows the magnitude of the change in national income due to a…

Q: Autonomous consumption = R100m Investment spending = R300m Government spending = R200 million…

A: Autonomous Consumption = 100 Investment Spending = 300  Government Spending = 200  Exports = 150…

Q: If the Marginal Propensity to Consume (MPC) is .90, estimate the total (multiplied) effect of…

A: Marginal propensity to consume (MPC): The MPC is defined as the ratio of change in consumption due…

Q: When the government borrows funds in financial markets to pay for budget deficits and interest rates…

A: Fiscal policy is use of government revenue and spending to influence the economic activity. The…

Q: If the MPC in an economy is 0.75, government could shift the aggregate demand curve leftward by $60…

A:

Q: If investment and consumption expenditures fall and cause GDP to fall, what is an appropriate fiscal…

A: Fiscal policy is implemented by the government in the form of change in taxes and spending. Monetary…

Q: An economy has a fixed price level, no imports and no income taxes.  MPC is 0.75 and real GDP is…

A: Given MPC= 0.75 Real GDP Y =$190 billion  Government expenditure is increased by $5 billion. Price…

Q: Questions number 6 to 10 are based on having an MPC equal to 0.8 and potential output is P800…

A: In Keynesian economics, the change in aggregate expenditure is able to affect the output level(real…

Q: Consider an initial IS-LM equilibrium with normally-sloped curves. An increase in government…

A: IS-LM equilibrium: The IS-LM (Investment Savings-Liquidity Preference Money Supply) model is…

Q: The multiplier effect states that there are additional shifts in aggregate demand from fiscal…

A: Answer to the question is as follows :

Q: Assume the simple spending multiplier equals 10.  Determine the size and direction of any changes of…

A: 1. If spending rises by $8 billion at each spending levelA real GDP rises by $80 billion (8*10)This…

Q: Differentiate the macroeconomic effects, multiplier and crowding effect, that explain the causes of…

A: The aggregate demand measures the total amount of a good or service that all the buyers in a market…

Q: If the marginal propensity to consume is 0.9, then the tax multiplier will be: Group of answer…

A: Here, it is given that the marginal propensity consume of an economy is 0.9 due to which a change in…

Q: Assuming no crowding-out, investment-accelerator, or multiplier effects, a $100 billion increase in…

A: Multiplier refers to the situation where the number of times the level of income increases due to…

Q: For an econmomy with a MPC of .80 the multiplier will be      5     4     a magnitue of 1 less…

A: MPC is the marginal propensity to consume which is the proportion of income spent on consumption.

Q: government spending multipliers are larger than tax multipliers and politicians can direct…

A: First we have to look at the equation for the Simple-Keynesian-Model. Y=C(Y-T)+I+G Where-Y is the…

Q: In a recession, needs-tested spending ________ and induced taxes ________. increases; increase…

A: Fiscal policy has two major parts: government spending(G) and taxes(T). Needs tested spending is the…

Q: Explain and discuss contactionary fiscal policy and contactionary monetary policy with IS-LM graphs…

A: The IS curve shows the negative relationship between interest rate and real GDP where goods market…

Q: (Fiscal Policy) Define fiscal policy. Determine whether each of the following, other factors held…

A: Answer- Fiscal Policy - This is a policy which a government adjusts its spending levels and tax…

Q: The government enacts a policy to increase spending by $2 billion. The MPS is 0.25. What would be…

A:

Q: If the MPS in an economy is 0.43, government could shift the aggregate demand curve rightward by $40…

A: MPS is the proportion of increase in income that goes into saving i.e. MPS = ΔS/ΔY We are given MPS…

Q: Which of the following statements is FALSE?   A. An expansionary fiscal policy might consist of an…

A: Discretionary fiscal policy is a policy in which the government made changes in its spending and/or…

Q: Suppose there are both multiplier and crowding out effects but without any accelerator effects. An…

A: Components of aggregate demand in a closed economy include consumption, investment and government…

Q: When the unemployment rate increases, the budget: a. is unaffected b. tends to move into deficit c.…

A: Unemployment adversely impacts the central government's capacity to create pay and furthermore will…

Q: Which of the following is true?   a.  All economists agree that the tax multiplier is smaller than…

A: Government spending multiplier = ratio of change in income/ratio of change in government spending.

Q: In an attempt to stimulate the economy, the Government has announced a $23.9 billion increase in its…

A: When aggregate demand and supply are equal of goods then goods market is said to be in equilibrium.…

Q: which of the following is correct about the effects of tax Select one: a. Taxes affect the IS curve,…

A: 1) Tax is a compulsory payment by the citizen to the state. Taxes do impact the IS curve but not the…

Q: ent in this economy decides to increase government purchases by $400 billion. The increase in govern…

A: Marginal propensity to consume is the proportion of the disposable income that a person wants to…

Q: The multiplier effect occurs when: Group of answer choices a. the planned spending in the economy…

A: The multiplier effect occurs when an initial change in autonomous spending led to a greater final…

Q: As part of the response to the Covid-19 virus, the Federal government passed a 2 Trillion-dollar…

A: As, the Federal government passes a 2 trillion bill, as a response for Covid-19 pandemic. It does…

Q: Consider a hypothetical economy in which households spend $0.75 of each additional dollar of their…

A: Given:

Q: Crowding out occurs when   Question 25 options:   increased money supply causes private…

A: Crowding out is a situation that arises when the government applied pure expansionary fiscal policy.…

Q: If government purchases increase by $20 billion and aggregate demand shifts rightward by $30 billion…

A: the MPC for this economy is 0.33

Q: The economy is currently at a level of output that exceeds potential GDP (Yp).  List two fiscal…

A: Potential output is also called the natural GDP which says the maximum level of real GDP that an…

Q: What will be the impact on the spending multiplier if the marginal propensity to save (MPS)…

A: Marginal propensity to save (MPS) is the ability to save the increased income instead of spending on…

Q: The federal government implements an expansionary fiscal policy of increased spending and decreased…

A: Fiscal policy delineates the efforts put by the federal government to control and regulate the…

Q: Given the following model for an economy C = 100 + 0.8Yd G = 800 T = 500 I = 200 a) Calculate the…

A: As per the guidelines, we only answer the first three sub-parts at a time. Please resubmit the other…

Q: Given the above model for an economy C = 100 + 0.8Yd G = 800 T = 500 I = 200 a) Calculate the level…

A: Hello, Thank you for the question. Since there are many sub-parts in the question, only the first…

Q: Differentiate the multiplier effect and crowding-out effect that explain the causes of the…

A: The phenomenon of multiplier describes a change (increase or decrease) in the expenditure injection…

Q: If the MPC in an economy is .6, the government could shift the aggregate demand curve to the right…

A: With the increase in government expenditure, Aggregate Demand shifts to the right by initial…