MACROECONOMICS W/CONNECT
18th Edition
ISBN: 9781307253092
Author: McConnell
Publisher: Mcgraw-Hill/Create
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Question
Chapter 11, Problem 4P
To determine
The level of real GDP of the economy.
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Suppose that a certain country has an MPC of .9 and a real GDP of $400 billion. If its investment spending decreases by $4 billion, what will be its new level of real GDP?
Calculate MPC when a change in investment spending of 40 million leads to an increase in real GDP by 160 million.
How much of a change in GDP will result if firms
increase their level of investment by $8 billion
and the MPC is 0.75?
Chapter 11 Solutions
MACROECONOMICS W/CONNECT
Ch. 11.2 - Prob. 1QQCh. 11.2 - Prob. 2QQCh. 11.2 - Prob. 3QQCh. 11.2 - Prob. 4QQCh. 11.7 - Prob. 1QQCh. 11.7 - Prob. 2QQCh. 11.7 - Prob. 3QQCh. 11.7 - Prob. 4QQCh. 11 - Prob. 1DQCh. 11 - Prob. 2DQ
Ch. 11 - Prob. 3DQCh. 11 - Prob. 4DQCh. 11 - Prob. 5DQCh. 11 - Prob. 6DQCh. 11 - Prob. 7DQCh. 11 - Prob. 8DQCh. 11 - Prob. 1RQCh. 11 - Prob. 2RQCh. 11 - Prob. 3RQCh. 11 - Prob. 4RQCh. 11 - Prob. 5RQCh. 11 - Prob. 6RQCh. 11 - Prob. 7RQCh. 11 - Prob. 8RQCh. 11 - Prob. 9RQCh. 11 - Prob. 1PCh. 11 - Prob. 2PCh. 11 - Prob. 3PCh. 11 - Prob. 4PCh. 11 - Prob. 5PCh. 11 - Prob. 6PCh. 11 - Prob. 7PCh. 11 - Prob. 8PCh. 11 - Prob. 9PCh. 11 - Prob. 10P
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- A. Suppose the country of Freelandia has an MPC of .85 and a real GDP of $200 billion. If its investment spending decreases by $3 billion, what will be its new level of real GDP?arrow_forwardLevel of investment goes up by 200. What happens with the level of GDP if you know that MPC = 0,8 and net tax rate = 0.1?arrow_forwardThe fluctuations in the income level that result from changes in investment spending depend only on the magnitude of the changes in investment spending but not on the size of the MPC tend to be larger if the income tax rate (t) is larger tend to be larger with a larger MPC tend to be larger the larger the marginal propensity to import tend to be larger with a larger MPSarrow_forward
- Calculate investment expenditure from the following data about an economy which in equilibrium: National income =$1000 Marginal propensity to save=$0.25 Autonomous consumption expenditure=$200arrow_forwardIf you spend $100 and the MPC is 0.9, how much will total GDP rise because of this spending of $100 ? $500 $100 $250 $1,000arrow_forwardWhat would be the level of saving if the real GDP (Y) were at $7 trillion? what is the level of desired investment at this level? What forces are at work at a real GDP of $7 trillion? What will be the equilibrium level of real GDP?arrow_forward
- In an economy MPC equals to 0.2 if the investment increases by $ 100 billion calculate the increase in income?arrow_forwardSuppose investment spending increases by $50 billion and as a result the equilibrium income increases by $200 billion. What is the value of the MPC?arrow_forwardA $300 million decrease in investment spending will increase real GDP by more than $300 million. Is this a true statement? What is the relationship between investment spending and the GDP? I think that investment spending goes directly into the economy so I believe the answer to be true. But I am not sure.arrow_forward
- With an MPC of 0.8, government spending increases $20 billion while taxes decrease $10 billion. Based on this data, what is the cumulative effect on GDP?arrow_forwardSuppose that the recent economic outlook in the country of Mountainia has been the opposite. Businesses have postponed planned investments and have begun to accumulate cash. If businesses in Mountainia postpone $12 billion of their planned investments, what would be the maximum expected change in GDP if its marginal propensity to save (MPS) is 0.05? $ billionarrow_forwardPlease calculate level of GDP in equilibrium, consumption and savings level if you know that: I (investment) = 300 Ca (Autonomous Consumption) = 100 MPS (Marginal Propensity to Save) = 0,1 G (Government Expenditures) = 300 T (net taxe rate) = 0,2arrow_forward
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