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What is ?
1-)Marginal Propensity To Save
2-)Planned Aggregate Expenditure
3-)Unplanned Inventory Change
Step by step
Solved in 4 steps
- If planned aggregate spending rises by $10 billion and the marginal propensity to consume is 0.75, then equilibrium real GDP changes by:The greater is the marginal propensity to consume, the smaller is the marginal propensity to save. 1) True 2) False A rise in the price level decreases the real value of financial assets with fixed money values and, as a result, decreases spending by the holders of these assets. 1) True 2) FalseA high marginal propensity to save means ? (a) lower multiplier (b). Higher is the investment spending (c). Higher is the equilibrium income (d). A higher level of aggregate demand (e). A high level of exports
- The marginal propensity to consume is 0.75. What will be the initial change in consumption when? 1) Taxes fall by $20 billion 2) Taxes rise by $40 billion 3) A recession leads to a reduction in personal income of $500 billionExplain/discuss the amount of unplanned inventory change when the economy is in equilibrium.From the information below calculate aggregate demand; Consumption (C) = $200 + 0.6Y Investment (I) = $300 Government (G) = $100 Net Export (NX) = $50 What is the value of the marginal propensity to save?
- If the MPS rises, then the MPC will: a. Fall b. Rise c. Stay the same In what direction will each of the following occurrences shift the consumption and saving schedules, other things equal? a. A large decrease in real estate values, including private homes. b. A sharp, sustained increase in stock prices. c. A 5-year increase in the minimum age for collecting Social Security benefits. d. An economywide expectation that a recession is over and that a robust expansion will occur. e. A substantial increase in household borrowing to finance auto purchases. Irving owns a chain of movie theaters. He is considering whether he should build a new theather downtown. The expected rate of return is 15 percent per year. He can borrow money at a 12 percent interest rate to finance the project. Should Irving proceed with this project? Which of the following scenarios will shift the investment demand curve right? (Select one or more answers) a. Business taxes increase b. The expected return…Calculate the total change in aggregate spending if investment decreases by $250 billion and the marginal propensity to consume is 0.9. Instructions: Enter your response as a whole number. Aggregate demand decreases by $ ________billion.The marginal propensity to consume (mpc) is 0.8. In addition, government spending increases by $200 billion and lump sum taxes fall by $100 billion. What is the total change in the equilibrium real GDP, if the price level is fixed in the short run?
- Suppose that the marginal propensity to consume is 0.8, and investment spending increases by $100 billion. The increase in aggregate demand is:If firms suddenly become more optimistic about theprofitability of investment and planned investmentspending rises by $100 billion, while consumers becomemore pessimistic and autonomous consumer spendingfalls by $100 billion, what happens to aggregate output?The level of AD needed to achieve full employment is $150 billion. The current level of Real GDP (output) is $100 billion. A $5 billion increase in government spending closes the gap and restores FullEmployment. What is the Marginal Propensity to Consume?