1. Explain the basic logic behind the multiplier in words. Why does it require b, the marginal propensity to consume, to be between 0 and 1? 2. (More difficult) What would happen to the multiplier analysis if b = 0? If b = 1?
Q: I need help
A: Answer: (1). Quantity demanded is how much of a product or service people are willing to buy at a sp...
Q: The UK pound is trading at 1.54 Canadian dollars per UK pound. There is purchasing power parity at t...
A: Inflation refers to the situation of increasing price level in the economy. Exchange rate refers to ...
Q: Bob cannot find a job because he does not have the required skills.
A: Lack of required skill will leads to jobless.
Q: If the MPC IS 0.9 What should the government do to increase GDP by $4500?
A: The multiplier effect occurs due to an injection in the circular flow of income that increases spend...
Q: Net investment is equal to: The change in the stock of capital Gross investment plus depreciat...
A: Net investment refers to the additions made in the capital stock.
Q: A $1200 television has a 10 percent tax. Calculate the tax amount and total amount due.
A: The price of television = $1200 The tax rate on television = 10%
Q: A monopolist is deciding how to allocate output between two geographically separated markets (East ...
A: The equilibrium condition of monopoly reflecting the profit maximization point is one where marginal...
Q: Physical Capital Labour Force Output Productivity Year (Tools per worker) (Workers) (Gaggles of gop)...
A: Production is the process of combining the number of inputs to make the output for consumption.
Q: How did exploration lead to inflation in Europe?
A: Inflation occurs due to increase in money supply in an economy.
Q: Two major shocks that led to the Great Recession were a) decline in household wealth, negative credi...
A: Great recession started in 2008.
Q: Under a flexible exchange rate system, a decrease in the value of a domestic currency in terms of fo...
A: Decrease in value of domestic currency in terms of foreign currency is referred to as currency depre...
Q: Suppose that Erin currently receives Social Security payments and will continue to receive them next...
A: Given value: The consumer price index or CPI = 2.3%
Q: A good example of a policy to increase an economy's saving rate is_ a. toreduce poverty O b. to redu...
A: In macroeconomics, the savings refers to the part of income that is not spent on consumption or part...
Q: The tables describe an economy's labour markets and its production function in 2017. Real wage rate ...
A:
Q: Describe some of the motives and mistakes made by the Fed?
A: Federal Reserve Bank is the Central bank of the Country U. It was established on 23rd December 1913....
Q: Refer to Figure 5-6. One way to obtain the economically efficient amount of chicken pox vaccinations...
A: The answer is (PE-PF)
Q: Describe in your words : Shortage and Surplus Price Floor and Price Ceiling
A: Shortage of a product or good means that the availability of that product is less in comparison to t...
Q: Suppose that the MPS = 0.2 and the government is interested in raising the level of output in the ec...
A: The income of an individual is either saved or consumed by the individual. When there is a marginal ...
Q: Mr. Don is the director of A-Design Inc., a federally incorporatedcompany in Canada, specializing in...
A: Given information: Invested amount in machine or machine's cost = $100000 Life of machine = 10 years
Q: QUESTION Every government is expected to perform some key economic roles to ensure sustainable deve...
A: Sustainable development: Sustainable development refers to the developmental policy which aims to ut...
Q: The price for cigarettes sold by Big Tobacco Co Ltd was 6.00 per packet in March 2018. During the mo...
A: The price elasticity of demand shows the responsiveness of quantity demanded due to change in price ...
Q: Only d subparts
A: Since you have asked to solve the part "d" only so I am solving that part only.
Q: The amount of a good that buyers are willing and able to purchase at a given price.
A: Consumer theory is the theory that deals with determination of a point at which a consumer maximizes...
Q: Draw the diagrams for MRS for perfect substitutes, perfectcompliments and close substitutes
A: The marginal rate of substitution is defined as how many units of good x have to be given up for gai...
Q: Consider a national income model as: Y= C + I0 + G Y= National Income C= (Planned) Consumption Expen...
A: The expenditure method is a framework for ascertaining total national output (GDP) that investment, ...
Q: What is the difference between a shift of the curve and movement ALONG the curve?
A: Demand is the total quantity of goods and services for which the consumers are willing to pay at dif...
Q: Many police officer positions require the applicant to have a college degree even though the tasks o...
A: Police departments: This organization is responsible for making sure that they obey the law.
Q: Which of the following statements would you expect to be true about pizzas and food? Food has a high...
A: Price elasticity measures how quantity demanded changes when the price of a good changes. Food inclu...
Q: If there is a need to increase the quantity and supply of oil, the most effective way to get it quic...
A: Supply alludes to the number of services and goods offered available to be purchased at a given pric...
Q: .4 binsuolnt $ kocial flannsn want to Imorimne htal Sun flus. Con this he achieved at the Brofit mar...
A: As there are many questions, only the first question would be answered. To get the answer of the res...
Q: The following table shows the relationship between workers and output for a small factory in the sho...
A: Marginal product of labor is the additional output produced, when there is an increase in 1 unit of ...
Q: Question 4 Calculate the net value added at the market price of a firm: Sale - 400Change in stock - ...
A: The value of output can be calculated by adding the sales and change in stock. Value of output = sal...
Q: Describe the major elements of employee compensation.
A: Compensation can be defined as the amalgamation or package given to any labourer of industries that ...
Q: Question is in the photo! Thank you so much!
A: the correct answer is Too little of the good will be produced
Q: The table shows the marginal cost C'00, the marginal revenue R'(x) for producing x items. The third ...
A: Marginal cost(MC) is the addition to cost in producing one more unit of output. Marginal revenue(MR)...
Q: Akua gains utility from consumption C and leisure L. The most leisure she can consume in any given w...
A: The {Marginal Rate of Substitution} MRS can be defined as the amount of a commodity that an individu...
Q: The cash flow transactions shown in the cash flow diagram below are said to be equivalent to 9% of t...
A: PW of known cash flows (TL) = 280 + 210 x P/F(9%, 1) + 140 x [P/F(9%, 2) + P/F(9%, 3)] + 210 x P/F(9...
Q: If the MPC is 0.9 what will happen to GDP if the government cut spending bt $2.
A: ∆Y = 11-c∆G where Y = GDP c = MPC G = government spending
Q: CDO's were made from pools of mortgage backed securities. The CDOs used a) the most senior tranches...
A: CDO's were made from pools of mortgage backed securities.
Q: A low concentration ratio means that there is a low probability of entering the industry. ...
A: Low concentration ratio means higher competition in the industry.
Q: What will happen to demand for labor in the food service delivery during this pandemic if the demand...
A: Labor Demand: The demand for labour depends on the demand of output. If the firm produces more outpu...
Q: Please refer to the figure above. When MC is constant, the ATC is also constant. How much profit the...
A: A monopoly acts as a price maker as it is the sole producer of a good in the market thus produces wh...
Q: The Laffer curve suggests A.there is some maximum amount of tax revenue that the government can co...
A: LC is a theory formulated by the economist Arthur Laffer. The LC denotes the relation between the ta...
Q: Write brief notes on the following indicating their usefulness on information work ; Primary sources...
A: Economics is the study of that branch where individuals, governments, businesses and the societies d...
Q: Question You are an executive for Super Computer, Inc. (SC), which rents out super computers. SC...
A: With a two part tariff and no price discrimination, the rental fees will be equal to consumer surplu...
Q: What happens to the wage rate as the non pecuniary of a job increase?
A: Non pecuniary benefits are those benefits considered as “non-cash” benefits which are earned by the ...
Q: Expain to cheat after forming the cartel
A: An entity created to maintain supply in order to manipulate or control prices through a formal arran...
Q: You have been hired as a marketing consultant to Johannesburg Burger Supply, Inc., and you wish to c...
A: The demand (dd) for a product shows the quantity that the consumers are willing to purchase at the g...
Q: Given: TC = 3,000 + 100Q TC = 3000 + 100Q ATC = Q = 10 AC = TC / Q TC = 3000 + 100*10 = 4000 ATC = 4...
A: TC = FC + VC where TC = Total cost FC = Fixed cost VC = Variable cost
Q: Akua gains utility from consumption C and leisure L. The most leisure she can consume in any given w...
A: Given: Utility function is: U (C, L) = C × LC = 660 L= 110
1. Explain the basic logic behind the multiplier in words. Why does it require b, the marginal propensity to consume, to be between 0 and 1?
2. (More difficult) What would happen to the multiplier analysis if b = 0? If b = 1?
Step by step
Solved in 2 steps
- Suppose that investment demand increases by $100. Assume that households have a marginal propensity to consume of 80 percent. Compute the first three rounds of multiplier effects as follows: a) What are the first cycle changes in spending? Total cumulative change equals? b) What are the second cycle changes in spending? Total cumulative change equals? c) What are the third cycle changes in spending? Total cumulative change equals?An economy has a marginal propensity to consume of 0.5, and Y*, the income-expenditure equilibrium GDP, equals $500 billion. Given an autonomous increase in planned investment of $10 billion, answer the following questions. a. What is the value of the multiplier? Value of the multiplier = b. What would you expect the total change in Y* to be based on the multiplier formula? Change in Y* based on the multiplier = billion c. What is the total change in real GDP after the 10 rounds? It may be beneficial to make a table on a separate sheet of paper to calculate the change in real GDP for each of the rounds, and then add up the values. Total change in real GDP (10 rounds) =1) Determine the value of the multiplier for this economy, and find the equilibrium value of Y.
- 6. Is the relationship between changes in spending and changes in real GDP in the multiplier effect a direct (positive) relationship or is it an inverse (negative) relationship? How does the size of the multiplier relate to the size of the MPC? The MPS? What is the logic of the multiplier-MPC relationship?47)Which one is TRUE? Select one: a. The larger the MPC, the smaller the multiplier. b. The multiplier is the ratio of the change in autonomous expenditure to the change in real GDP c. The real world multiplier is larger than the textbook multiplier when we take into account the impact of changes in GDP on imports, inflation and the interest rate. d. The real world multiplier is smaller than the textbook multiplier when we take into account the impact of changes in GDP on imports, inflation and the interest rate.Question 1: You are given the data concerning Freedonia, a legendary country i. C = 200 + 0.8Y ii. I = 100 a) What is the MPC to consume and what is the MPS? b) Solve for equilibrium income. c) Suppose I changes to 110, what is the new equilibrium level of income? By how much does a $10 increase in planned investment changes equilibrium income? What is the value of multiplier?
- Question 1. Explain why the Aggregate Demand curve is downward sloping . 2. Explain why the Aggregate Supply curve is upward sloping . 3. What determines potential output Yf, and how can the economy exceed Yf in the short run? 4. Explain the Equilibrium condition of Aggregate Expenditure= output Y. How are inventory changes related to AE and Y? 5. Define the multiplier and the marginal propensities to consume (MPC) and save (MPS). What is the relationship between the MPC and the multiplier? 6. Compare and contrast the short run Keynesian and long run Neoclassical views of the aggregate supply and Phillips curves 7. For each the following economies, calculate equilibrium Y*, the multiplier, and the size of the recessionary or inflationary gap, if any. a. AE= 250 +.75 Y Yf= 1200 b. AE= 400+ .9 Y Yf= 3000 c. AE= 300 +. 8Y Yf=1500 d. AE= 300+ .67 Y Yf=1000Table 2 shows elements in the national income accounts of an economy. Assume the economy is currently in equilibrium. elements billions Consumption (total) 80 Investment 9 Government Expenditure. 6 Imports 15 Exports 8 C) If national income now rises by £22 billion and as a result, the consumption of domestically produced goods rises to £80 billion. Calculate the marginal propensity to consume (MPC). D) What is the value of the multiplier? E) Comment on the results in part (c) and (d).Explain the multiplier intuitively. Why is it that an increase inplanned investment of $100 raises equilibrium output by morethan $100? Why is the effect on equilibrium output finite? Howdo we know that the multiplier is 1/MPS?
- Income and Expenditure — End of Chapter Problem An economy has a marginal propensity to consume of 0.5, and Y*, the income-expenditure equilibrium GDP, equals $500 billion. Given an autonomous increase in planned investment of $10 billion, answer the following questions. a. What is the value of the multiplier? Value of the multiplier = b. What would you expect the total change in Y* to be based on the multiplier formula? Change in Y* based on the multiplier = billion c. What is the total change in real GDP after the 10 rounds? It may be beneficial to make a table on a separate sheet of paper to calculate the change in real GDP for each of the rounds, and then add up the values. Total change in real GDP (10 rounds) = billion d. How do your answers to the change in GDP and Y compare? The answer to total change in GDP after 10 rounds and the change in Y* based on the multiplier formula areAssume the marginal propensity to consume is 0.8. If consumer spending rises by $20 billion, then total income through the multiplier effect will: Increase by $100 billion Decrease by $100 billion Increase by $10 billion Will not change How do I calculate this?14. Given this diagram; what is the level of I (investment spending)? 15. Given this diagram; what is the level of Xn (net exports)? 16. Given this diagram; what is the mpc (marginal propensity to consume?