When the MPC increases: a. the government spending multiplier stays the same b. the government spending multiplier decreases c. the government spending multiplier also increases d. the government spending multiplier could increase or decreases e.depending on whether government spending is increasing or decreasing

When the MPC increases: a. the government spending multiplier stays the same b. the government spending multiplier decreases c. the government spending multiplier also increases d. the government spending multiplier could increase or decreases e.depending on whether government spending is increasing or decreasing

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 5.10P

See similar textbooks

Similar questions

Suppose an initial increase in government spending (G) increased GDP by $50,000. If he simple spending multiplier is 2.5, the size of the initial government spending was
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?
what is MPC, MPS and spending multiplier?
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?
When the economy is in a recession, the government will want to increase output. If the multiplier equals 2.5 and the government increases spending by 200, how much will output increase by? A) 900 B) 300 C) 500 D) 100
Mathematically prove that balanced budget multiplier is one. Interpret it
Q)If the MPC .8 and we have a 200B GDP Gap, how much will initial expenditures need to increase to bring the economy to full employment GDP.
given a simple economy with consumption, government and investment. suppose income (Y)= 1000 , the MARGINAL PROPENCITY TO consume is =0,8, thw autonomous comsumption (a) = 100, investment (I) = 80 AND Government (G) = 100 and tax rate is =0,1 calculate the expenditure multiplier