EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 28, Problem 7DQ
To determine
MPC and MPS.
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Students have asked these similar questions
Suppose that Country X's government wants to increase output. If the multiplier equals 2.5
and the government increases spending by 300, how much will output increase by?
O 750
O 200
50
100
If the multiplier is 4, what is the MPC?
O 0.25
O 0.5
O 0.75
1
Which of the following changes in personal income tax would lead to the smallest increase in
consumption?
O a.
O b. a $15 000 decrease in taxes, if MPC equals
0.6
O c.
a $30 000 decrease in taxes, if MPC equals
0.25
Oe.
a $20 000 decrease in taxes, if MPC equals
0.5
O d. a $12 000 decrease in taxes, if MPC equals
0.75
a $10 000 decrease in taxes, if MPC equals
0.2
Chapter 28 Solutions
EP ECONOMICS,AP EDITION-CONNECT ACCESS
Ch. 28.2 - Prob. 1QQCh. 28.2 - Prob. 2QQCh. 28.2 - Prob. 3QQCh. 28.2 - Prob. 4QQCh. 28.5 - Prob. 1QQCh. 28.5 - Prob. 2QQCh. 28.5 - Prob. 3QQCh. 28.5 - Prob. 4QQCh. 28 - Prob. 1DQCh. 28 - Prob. 2DQ
Ch. 28 - Prob. 3DQCh. 28 - Prob. 4DQCh. 28 - Prob. 5DQCh. 28 - Prob. 6DQCh. 28 - Prob. 7DQCh. 28 - Prob. 8DQCh. 28 - Prob. 9DQCh. 28 - Prob. 1RQCh. 28 - Prob. 2RQCh. 28 - Prob. 3RQCh. 28 - Prob. 4RQCh. 28 - Prob. 5RQCh. 28 - Prob. 6RQCh. 28 - Prob. 7RQCh. 28 - Prob. 8RQCh. 28 - Prob. 9RQCh. 28 - Prob. 1PCh. 28 - Prob. 2PCh. 28 - Prob. 3PCh. 28 - Prob. 4PCh. 28 - Prob. 5PCh. 28 - Prob. 6PCh. 28 - Prob. 7PCh. 28 - Prob. 8PCh. 28 - Prob. 9PCh. 28 - Prob. 10P
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- Given that marginal propensity to save (MPS) is 0.5, what is the multiplier? O 2 O 4 0.5arrow_forwardWhat is the initial change in consumption if an economy's MPC is 0.75 and there is a decrease in taxes of $1 billion? O $1.75 billion O $1 billion O $1.33 billion O $0.75 billionarrow_forwardAn economy has a consumption function of C = 20 + 0.75(YD), taxes = 10+0.2(Y), investment equal to 10, government expenditure equal to 15, exports equal to 15, and an import function of M = 10. 1) What is the equilibrium real GDP for this economy? O A. 156.25 O B. 146.88 Oc. 106.25 O D. 150.50 2) What is the multiplier for a change in government spending for this economy? O A. 3.5 O B. 2.5 O c. 3.0 O D. 4.0arrow_forward
- Problem 3 Given the below data Disposable Income Consumption expenditure (dollars) 0. 100 100 180 200 260 300 340 400 420 500 500arrow_forwardQUESTION 10 If the multiplier is 5 what would be the change in consumption if income rises by 50? O a.40 O b. 90 O c. 250 O d. 10arrow_forward2. L Give Up! Suppose the Japanese economy has been experiencing slow growth. As a result, the Prime Minister, who thinks John Maynard Keynes was the greatest economist ever, has decided to increase government spending. The Prime Minister asks the head of the economic council to determine the increase in government spending necessary to bring the economy to full employment. Assume there is a GDP gap of 1 trillion yen and the marginal propensity to consume (MPC) is 0.60. What advice should the head of the economic council give the Prime Minister? O The recessionary gap is equal to 400 billion yen. O The inflationary gap is equal to 400 billion yen. O The recessionary gap is equal to 625 billion yen. O The inflationary gap is equal to 625 billion yen.arrow_forward
- Intended Spending (billions) $2,300 $2,100 $1,900 $1,700 $1,500 The marginal propensity to consume is 01 O 19/21. O 2/3. O 5/7. 45% $1,500 $1,800 $2,100 $2,400 $2,700 Gross Domestic Product (billions) impossible to tell from the graph. Consumption plus investment Consumptionarrow_forwardAccording to the text, a "multiplier" is used as an assessment and evaluation tool for several reasons. Which of the following is NOT a reason for using a multiplier? Seleet one: O 1. A multiplier represents the amount of times one dollar will be spent before it leaks out into the cconomy. O 2. A multiplier is used to assess overall return on investment for one dollar spent. 3. A multiplier is used to discount a future expenditure in terms of current dollars that needs to he spent. O 4. A multiplier is used to evaluute the effectiveness of one event or property compured to another.arrow_forwardRefer to the Table. The government spending multiplier in this economy is Planned Output (Income) Taves Consumption Savings Investment 1000 L100 Net Planned 200 680 120 200 200 140 200 200 1,200 200 200 200 840 160 1300 1400 1.500 920 200 200 200 LORO 200 1600 1,160 240 2. 4. 5. 10.arrow_forward
- Planned Aggregate Spending (billions of dollars) 200 180 160 140 120 100 80 60 O 0.5 40 20 O 0.95 0 O 0.85 0 20 O 0.75 C 1 Question 8 40 1 1 1 1 O none of the answers given is correct A 7. What is MPC if this hypothetical economy were to move the macroeconomic poin A? B 45 degree line Planned AE New Planned AE 60 80 100 120 140 160 180 200 Real GDP (in billions of dollars)arrow_forwardCF 1 2 3 4. 5 Disposable income (trillions of 2005 dollars) In the above figure, at a disposable income level of $2 trillion, saving equals Select one: O a. $4 trillion. O b. zero. O c. consumption expenditures. O d. disposable income. 6. 3 DT Processing of...pdf 2 Introduction to..pdf odf here to search Consumption expenditure (trillions of 2005 dollars) 5, IIarrow_forwardSuppose an economy has no imports (MPI, m = 0). The MPC (c) is 0.75 and real GDP is $120 billion. Businesses increase investment by $4 billion. The multiplier is in real GDP from the increase in investment is and the change billion. O a. 5; $16 O b. 4; $25 O C. 5; $25 O d. 4; $16 e. 0.75; $3arrow_forward
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