When the general price level falls Select one: a. investment falls as a result of the multiplier effect. b. consumption rises as a result of the real wealth effect.
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- b. From the Intertemporal Choice Model, many theories (non-Keynesian theories ofConsumption) came into being. Using graphical and mathematical expressions, compareand contrast the following theories on consumption behaviours:i. Franco Modigliani: Life-Cycle Hypothesisii. Milton Friedman: Permanent-Income Hypothesisiii. Robert Hall: Random Walk Hypothesisf the marginal propensity to consume is 0.75 and the federal government decreases spending by $200 billion the income-expenditure model predicts that real GDP will fall by: $750 billion $150 billion $1000 billion $800 billionMultiple choice question and give a short explanation about your answer: Which of the following is evidence that consumption depends on total wealth, andnot just on current income?a. people save very little for their retirement.b. the pre-announced phased-in tax cuts of 1981-83 caused little change inconsumption in 1981.c. a drop in consumer confidence, with unchanged current income, oftencauses total consumer spending to fall.d. none of the above.
- Give typing answer with explanation and conclusion Which of the following statements concerning consumption is incorrect? A. WEALTHY PEOPLE CONSUME MORE THAN OTHER PEOPLE. B. EXPECTATIONS ABOUT FUTURE PRICES AFFECT CONSUMPTION. C. MARGINAL PROPENSITY TO CONSUME USUALLY DECREASES AS INCOMES RISE. D. SAVINGS RATES DECREASE AS INCOME INCREASES. E. TAX INCREASES REDUCE CONSUMPTION.From the Intertemporal Choice Model, many theories (non-Keynesian theories of Consumption) came into being. Using graphical and mathematical expressions, compare and contrast the following theories on consumption behaviours:i. Franco Modigliani: Life-Cycle Hypothesisii. Milton Friedman: Permanent-Income Hypothesisiii. Robert Hall: Random Walk HypothesisQ-1 The following table shows income and consumption: Calculate: A- Saving (S), B- Marginal propensity to consume (MPC), C-Marginal propensity to save (MPS), D- Average propensity to consume (APC) E- Average propensity to save (APS). Q-2 Compute the (a) Number of unemployed, (b) Unemployment-rate, (c) Population, and (d) Labor force participation rate, using this data: Number of employed = 1800 million Not in labour force =730 million Number of Labour force =2500 million Q-3 Discuss how to control or reduce the Inflation and Unemployment.
- Please give a detailed solution with an explanation and answer all the questions provided in the image below.For the 3 blank answers here are the options:Blank Answer #1:investment or government purchases or consumptionBlank Answer #2:decreasing or increasingBlank Answer #3:an overall increase or an overall decrease or no overall change1. Explain the difference between Keynesian economics and Classical economics by mentioning the complete name of the economist who develops the theory/model. 2. Describe each of the components of the GNP equation and which one you feel can distort GNP the most.AD shocks change the equilibrium level of income(Y)and price(P). But the division of effects between P and Y depends on the shape of the SRAS curve. Using graphs show us what happens to P ,Y and the size of multiplier whena. SRAS is upward slopingb. SRAS is upward sloping and flatterc. SRAS is upward sloping and steeperd. SRAS is verticale. SRAS is horizontal
- AD shocks change the equilibrium level of income(Y)and price(P). But the division of effects between P and Y depends on the shape of the SRAS curve. Using graphs show us what happens to P ,Y and the size of multiplier whena. SRAS is verticalb. SRAS is horizontalSuppose that the components of planned spending in an economy are C=500 +0.8(Y-T), I=1500, G=2000, X=0, T=0.25Y, find short run equilbrium output?Multiple choice question just tell me the answer Early empirical success of Keynes’s conjectures demonstrated. a. that the average propensity to consume falls over time.b. that consumers smooth consumption between present and future.c. a strong positive relationship between income and consumption.d. consumers saved lower fraction of income.