Which of the following statements are correct? a.  If the marginal propensity to consume increases, the equilibrium level of income will increase. b.  In an open economy with a government sector the sum of the marginal propensity to consume and the marginal propensity to save is always equal   to 1. c.  If the tax rate decreases, the aggregate spending curve will shift parallel upwards. Select one: A. b and c B. b C. a and b

Question: Use The Following Information To Work Problems 4 To 6. In An Economy With No Exports And No Imports, Autonomous... Use the following information to work Problems 4 to 6. In an economy with no exports and no imports, autonomous consumption is $1 trillion, the marginal propensity to consume is 0.8, investment is $5 trillion, and government expenditure on goods and services is $4 trillion. Taxes are $4 trillion and do not vary with real GDP. 4. If real GDP is $30 trillion, calculate disposable income, consumption expenditure, and aggregate planned expenditure. What is equilibrium expenditure? 5. If real GDP is $30 trillion, explain the process that takes the economy to equilibrium expenditure. If real GDP is $40 trillion, explain the process that takes the economy to equilibrium expenditure. 6. If investment increases by $0.5 trillion, calculate the change in equilibrium expenditure and the multiplier.

Question 8 When an increase in the rate of growth causes a correspondingly larger increase in the rate of investment this is known as A BUD C D a positive output gap. a budget surplus. the multiplier. the accelerator.

A. Suppose you are given the following fixed-price Keynesian model: C=280 + 0.9Y. I-200 G=100 X3D200 M= 100 + 0.1Y. T= 100 a. Find the aggregate expenditure function. b. Find the equilibrium level of real GDP. C. What is the spending multiolier in this model? Tax multiplier? d. Show that leakages injections at equilibrium. e. If taxes increase by $100, what is the new equilibrium level of GDP? E. Show your answers to b) and e) graphically.