EBK ECONOMICS TODAY
18th Edition
ISBN: 9780133920116
Author: Miller
Publisher: YUZU
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Chapter 13, Problem bFCT
To determine
To show: The reason for which it can be said that transfers to
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Suppose actual real GDP is $13.37 trillion, potential real GDP is $12.33 trillion, and the marginal propensity to consume is 0.62. If we ignore price effects, by how many trillions of dollars should the government change its spending to fix the gap? (Round this to two digits after the decimal and enter this value as either a positive value or a negative value without the dollar sign.)
3. a) Suppose economists observe that an increase in government spending of 300 crore taka raises the total demand for goods and services to 400 crore taka. If these economists ignore the possibility of crowding out effect, calculate the marginal propensity to consume (MPC)?
b) Now suppose economists allow for crowding out. Would their new estimate of the MPC be smaller or larger than your answer to part a, explain.
With the economy in a recession due to inadequate aggregate demand, the government increased its spending by $1,200. Suppose the central bank takes no action for the time being, and the marginal propensity to consume is 2/3, how large will the increase of aggregate demand approximately?
Chapter 13 Solutions
EBK ECONOMICS TODAY
Ch. 13.D - Prob. 1PCh. 13.D - Prob. 2PCh. 13.D - Prob. 3PCh. 13 - Prob. 13.1LOCh. 13 - Prob. 13.2LOCh. 13 - Prob. 13.3LOCh. 13 - Prob. 13.4LOCh. 13 - Prob. aFCTCh. 13 - Prob. bFCTCh. 13 - Prob. 1CTQ
Ch. 13 - Prob. 2CTQCh. 13 - Prob. 1FCTCh. 13 - Prob. 2FCTCh. 13 - Prob. 1PCh. 13 - Prob. 2PCh. 13 - Prob. 3PCh. 13 - Prob. 4PCh. 13 - Prob. 5PCh. 13 - Prob. 6PCh. 13 - Prob. 7PCh. 13 - Prob. 8PCh. 13 - Prob. 9PCh. 13 - Prob. 10PCh. 13 - Prob. 11PCh. 13 - Prob. 12PCh. 13 - Prob. 13PCh. 13 - Prob. 14PCh. 13 - Prob. 15PCh. 13 - Prob. 16P
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