Macroeconomics (6th Edition)
6th Edition
ISBN: 9780134106229
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Question
Chapter 12, Problem 12.4.8PA
Subpart (a):
To determine
Themultiplier.
Subpart (b):
To determine
The value of multiplier.
Subpart (c):
To determine
Thechange in equilibrium
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Students have asked these similar questions
If a $102 decrease in investment spending causes income to decline by $102 in the first round of the multiplier process and by $57 in the second round, the multiplier in the economy is ___________________.
(Multipliers) Suppose investment, in addition to having an autonomous component, also has a component that varies directly with the level of real GDP. How would this affect the size of the spending multiplier?
If the multiplier is 5, then the MPC is
Answer
0.05
0.5
0.6
0.8
Question 43
In a certain economy, when income is $200, consumer spending is $145. The value of the multiplier for this economy is 6.25. It follows that, when income is $230, consumer spending is
Answer
$151.25.
$166.75.
$170.20.
$175.00.
Chapter 12 Solutions
Macroeconomics (6th Edition)
Ch. 12.A - Prob. 1RQCh. 12.A - Prob. 2RQCh. 12.A - Prob. 3RQCh. 12.A - Prob. 4RQCh. 12 - Prob. 12.1.1RQCh. 12 - Prob. 12.1.2RQCh. 12 - Prob. 12.1.3RQCh. 12 - Prob. 12.1.4PACh. 12 - Prob. 12.1.5PACh. 12 - Prob. 12.1.6PA
Ch. 12 - Prob. 12.1.7PACh. 12 - Prob. 12.1.8PACh. 12 - Prob. 12.1.9PACh. 12 - Prob. 12.2.1RQCh. 12 - Prob. 12.2.2RQCh. 12 - Prob. 12.2.3RQCh. 12 - Prob. 12.2.4RQCh. 12 - Prob. 12.2.5RQCh. 12 - Prob. 12.2.6PACh. 12 - Prob. 12.2.7PACh. 12 - Prob. 12.2.8PACh. 12 - Prob. 12.2.9PACh. 12 - Prob. 12.2.10PACh. 12 - Prob. 12.2.11PACh. 12 - Prob. 12.2.12PACh. 12 - Prob. 12.2.13PACh. 12 - Prob. 12.2.14PACh. 12 - Prob. 12.3.1RQCh. 12 - Prob. 12.3.2RQCh. 12 - Prob. 12.3.3RQCh. 12 - Prob. 12.3.4RQCh. 12 - Prob. 12.3.5RQCh. 12 - Prob. 12.3.6PACh. 12 - Prob. 12.3.7PACh. 12 - Prob. 12.3.8PACh. 12 - Prob. 12.3.9PACh. 12 - Prob. 12.3.10PACh. 12 - Prob. 12.3.11PACh. 12 - Prob. 12.3.12PACh. 12 - Prob. 12.4.1RQCh. 12 - Prob. 12.4.2RQCh. 12 - Prob. 12.4.3RQCh. 12 - Prob. 12.4.4PACh. 12 - Prob. 12.4.5PACh. 12 - Prob. 12.4.6PACh. 12 - Prob. 12.4.7PACh. 12 - Prob. 12.4.8PACh. 12 - Prob. 12.4.9PACh. 12 - Prob. 12.4.10PACh. 12 - Prob. 12.4.11PACh. 12 - Prob. 12.4.12PACh. 12 - Prob. 12.4.13PACh. 12 - Prob. 12.5.1RQCh. 12 - Prob. 12.5.2RQCh. 12 - Prob. 12.5.3RQCh. 12 - Prob. 12.5.4PACh. 12 - Prob. 12.5.5PACh. 12 - Prob. 12.5.6PACh. 12 - Prob. 12.1RDE
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Similar questions
- A flatter aggregate consumption function, if plotted on a graph with output on the horizontal axis and aggregate consumption on the vertical axis, would indicate which of the following: Select one: a. A smaller marginal propensity to consume and a larger multiplier. b. A larger marginal propensity to consume and a larger multiplier. c. A smaller marginal propensity to consume and a smaller multiplier. d. A smaller marginal propensity to save (MPS = 1 - MPC) and a smaller multiplier. Clear my choicearrow_forwardIf a $100 billion increase in government spending results in a $500 billion increase in real GDP, then the value of the multiplier:arrow_forwardConsider a hypothetical closed economy in which households spend $0.70 of each additional dollar they earn and save the remaining $0.30. The marginal propensity to consume (MPC) for this economy is0.7 , and the oversimplified multiplier for this economy is3.3333 . Suppose the government in this economy decides to increase government purchases by $300 billion. The increase in government purchases will lead to an increase in income, generating an initial change in consumption equal to$210 billion . This increases income yet again, causing a second change in consumption equal to$147 billion . The total change in demand resulting from the initial change in government spending is$1 trillion . The following graph shows the aggregate demand curve (AD1 ) for this economy before the change in government spending. Use the green line (triangle symbol) to plot the new aggregate demand curve (AD2 ) after the multiplier effect takes place. For simplicity,…arrow_forward
- Consider a hypothetical closed economy in which households spend $0.80 of each additional dollar they earn and save the remaining $0.20. The marginal propensity to consume (MPC) for the economy is______, and the spending multiplier for the economy is______. suppose the government in this economy decides to decrease the government purchases by $300 billion. The decrease in government purchases will lead to a decrease in income generating an initial change in consumption equal to______. This decreases income yet again, causing a second change in consumption equal to_______. the total change in demand resulting from the initial change in government spending is_____________. The following graph shows that aggregate demand curve (AD1) for this economy before the change in government spending. Use the green line (triangle symbol) to plot the new aggregate demand curve (AD2) after the spending multiplier effect takes place. Hint: be sure that the new aggregate demand curve (AD2) is parallel…arrow_forwardUse both numerical and graphical methods to find the multiplier effect of the following shift in the consumption function in an economy in which investment is always $220, government purchases are always $100, and net exports are always 2-40. (Hint: What is the marginal propensity to consume?)arrow_forward
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