Use the information in the following table to do exercises 8-15: Y C G $100 $120 $20 $30 $10 $300 $300 $20 $30 --$10 $500 $480 $20 $30 -$30 $700 $660 $20 $30 - $50 8. What is the MPC? 9. What is the MPI? 10 What is the MDS?
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12, thank you
MPC = Change in C / Change in Y = (300 - 120) / (300 - 100) = 180/200 = 0.90
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- use the following equation. C = 50 + 0.6(Y – T) 9) What is autonomous consumption in this economy? a) 0.4 b) 0.6 c) 30 d) 50 10) What is the government spending multiplier for this economy? a) -1.5 b) 1.5 c) -2.5 d) 2.5 11) If the government spends 20 more then what happens to consumption? a) increases by 50 b) decreases by 50 c) increases by 30 d) decreases by 30 12) In this economy we know that lowering taxes by 10 a) affects real GDP the same as increasing government spending by 10 b) affects real GDP more than increasing government spending by 10 c) affects real GDP less than increasing government spending by 10 d) affects real GDP but cannot be compared to government spending at allThe following equations describe an economy. (Think of C , I , G , etc., as being measured in Billions and I as a percentage; a 5 percent interest rate implies I = 5.) C= 0.8(1 - t )Y T=0.25 I=900-50i -G=800 L = 0.25Y-62.5i -M/-P= 500 a. What is the value of aG which corresponds to the simple multiplier (with taxes) ? b. By how much does an increase in government spending of ∆G increase the level of Income in this model, which includes the money market? c. By how much does a change in government spending of ∆G affect the equilibrium Interest rate? d. Explain the difference between your answers to parts a and b.Suppose that C = 100+ 0.75(Y -100), I= 50, G = 30, and X- M = 100, all in billions of dollars. What is the simple spending multiplier? What is real GDP demanded? What would happen to real GDP demanded if government purchases increased to $40 billion?
- In order to financially stimulate the nation, the Federal government injected $900 billion dollars into the economy. However, the results were less than spectacular. One reason could have been a failure to understand the marginal propensity to consume. Assume the marginal propensity to consume (MPC) was only 0.4. How much of that $900 billion went to increased consumption? Where did the rest of the money go? Increased consumption: Where did the rest go? Using MPC = 0.4, what is the spending multiplier (the actual numerical value please): What was the overall change in income as a result of the stimulus package after the multiplier completely works its way through the economy?Chapter 9 6.Use the following table to answer these questions: Y C I G X $ 500 $ 500 $ 10 $ 20 $ 60 $ 600 $ 590 $ 10 $ 20 $ 40 $ 700 $ 680 $ 10 $ 20 $ 20 $ 800 $ 770 $ 10 $ 20 $ 0 $ 900 $ 860 $ 10 $ 20 - $ 20 $ 1,000 $ 950 $ 10 $ 20 - $ 40 a. What is the MPC? b. What is the MPS? c. What is the MPI? d. What is the level of aggregate expenditures at each level of income? e. Graph the aggregate…Refer to Table 24.6. The value of the government spending multiplier A. is 10. B. is 5. C. is 0.9. D. cannot be determined from the available information.
- If the economy is currently at Q1 at $400 billion. If the economy is currently at Q3 $2000 billion Qf (full potential GDP) is at $1200 billion. MPC = .8 Calculate the simple multiplier? 2. Specifically, calculate the amount of money that should be implemented for each policy type at Q1 3. Specifically, calculate the amount of money that should be implemented for each policy type at Q3 Multiplier Equations Change in GDP = Change in Gov’t Spending * Multiplier Change in GDP = Change in Tax * Multiplier * MPC Multiplier = 1 (1-MPC)1. Suppose the MPC is .90 and the MPI is .10. if government expenditure goes up $100 billion while taxes fall $10 billion, what happen to the equilibrium level of real GDP? Use following equations for exercise 2-4 C= $100 + .8Y I=$200 G= $250 X = $100 - .2Y 2. What is the equilibrium level of real GDP? 3. What is the new equilibrium level of real GDP if government spending increases by $150? 4. What is the new equilibrium level of real GDP if government spending and taxes both increase by $150? 5. Make a graph showing the spending and tax revenue of your state government for as many years as you can find (use the government of your home country if you are not from the United States). What trends do you notice? What spending categories make up the largest share of the state budget? What are the largest sources of revenue?Assume that the economy is now governed by a government and begins trading with other economies. The economy is described by the following set of equations. ?=1000+0.5⋅?d ID = 600 G=700 T=400 EX=0.1⋅Y IM=100+0.1⋅Y YD = Y - T Calculate the equilibrium level of output Y* a) 2857 b) 4000 c) 6274 d) 4400 Whats the government expenditure multiplier? Whats the tax multiplier? Whats the ba;anced budget multiplier?
- Data is provided below for a small closed economy. Output/Income = 10,000 Consumption = 600 + 0.75(Y - T) Investment = 400 Taxes = 2,000 Government expenditure = 2,000 Assuming that fiscal policy has a multiplier effect and that investment and taxes remain unchanged, what will happen to output if government expenditure decreased by 500? Select one: It would increase by 500 It would decrease by 667 It would decrease by 500 It would increase by 2,000 It would decrease by 2,000 It would increase by 667In economics, the multiplier effect refers to the fact that when there is an injection of money to consumers, the consumers spend a certain percentage of it. That amount recirculates through the economy and adds additional income, which comes back to the consumers and of which they spend the same percentage. This process repeats indefinitely, circulating additional money through the economy. Suppose that in order to stimulate the economy, the government institutes a tax cut of $8 billion. If taxpayers are known to save 7% of any additional money they receive, and to spend 93%, how much total money (T) will be circulated through the economy by that single $10 billion tax cut?Suppose that when government spending increased by $200, total spending in the economy increased by $600. What is the government spending multiplier in this case? a. 3 b. $400 c. $800 d. 1/3
