Principles of Macroeconomics (11th Edition)
11th Edition
ISBN: 9780133023671
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 8, Problem 12P
Subpart (a):
To determine
MPC.
Subpart (b):
To determine
MPS
Subpart (c):
To determine
Multiplier.
Subpart (d):
To determine
Amount of unplanned investment.
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Use the graph to answer the questions that follow.
a.What is the value of the MPC?b.What is the value of the MPS?c.What is the value of the multiplier?d.What is the amount of unplanned investment at aggregateoutput of 300, 900, and 1,300?
Use the graph to answer the following questions:
a)what is the value of the MPC?
b)what is the value of the MPS?
SHORT ANSWER QUESTIONS
Increase in foreign holdings of assets in the United States
Exports of goods
Imports of services
Statistical discrepancy
Net transfers
Exports of services
Imports of goods
Income payments on investments
Increase in U.S. holdings of assets in foreign countries
Income received on investments
b. the balance of trade
c. the balance on the financial account
$3,288
31. The following are hypothetical data on the U.S. balance of payments. You can assume the balance on
capital account is zero. Use the data to calculate the following (SHOW YOUR WORK)
a. the balance on the current account
d. statistical discrepancy
-$29
1
64
694
-1,520
-444
-3,286
545
12. State how each of the following will affect the relative values of the U.S. dollar and the British pound
(say which currency appreciates and which currency depreciates):
(a) U.S. citizens switch from buying stock in U.S. companies to buying stock in British companies.
(b) The inflation rate in the United States decreases…
Chapter 8 Solutions
Principles of Macroeconomics (11th Edition)
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Similar questions
- Use the information in the table to answer the following questions. All numbers are in billions of 2012 dollars. Planned Investment (1) Real GDP (Y) $14,000 $15,000 $16,000 $17,000 $18,000 The equilibrium level of GDP is $ The MPC is billion. Consumption (C) $11,000 $11,750 $12,500 $13,250 $14,000 $1,500 $1,500 $1,500 $1,500 $1,500 (enter your response to two decimal places). Suppose that net exports increase by $400 billion. Using the multiplier formula, determine the new level of GDP. A $400 billion increase in net exports leads to a change in spending of $ billion, so the new level of GDP will be $ billion. Government Purchases (G) $2,500 $2,500 $2,500 $2,500 $2,500 Net Exports (NX) - $500 - $500 - $500 - $500 - $500arrow_forwardVery briefly summarize the relationships shown by (a) the consumption schedule, (b) the saving schedule, (c) the investment demand curve, and (d) the multiplier effect. Which of these relationships are direct (positive) relationships and which are inverse (negative) relationships? Why are consumption and saving in the United States greater today than they were a decade ago?arrow_forwardStudy the graph below. When will the multiplier be biggest? Price Level AD1 AS AD3 AD2 GDP Select one: a. When aggregate demand is at AD3 b. When aggregate demand is at AD2 c. When aggregate demand is at AD1 d. The multiplier will be the same size no matter what Aggregate Demand is ○ e. The multiplier will be one no matter what aggregate demand isarrow_forward
- 10. T/F/U. Fear of a recession causes a decrease in investment spending—I— which in turn impacts v. Draw a graph consistent with your answer.arrow_forwardUse the diagram to the right to answer the following: a. The equilibrium value of real GDP is $ trillion. (Enter your response as a whole number.) b. The MPC is equal to (Enter your response rounded to two decimal places.) c. The multiplier is equal to (Enter your response rounded to one decimal place.) d. What is the value of unplanned changes in inventories when real GDP has each of the following values? (Enter your responses rounded to one decimal place and include a minus sign if necessary.) GDP $10 trillion $12 trillion $14 trillion Unplanned Inventories trillion trillion trillion C Aggregate Expenditure, AE ($, trillions) 24.0- 22.0 ≈ ≈ ¦ CO 20.0- 18.0- 16.0- 14.0- 12.0+ 10.0- 8.0- 6.0- 4.0- 2.0- 0.0- O. 13.6 12.0 10.4 0 45° -~ 2 4 AE 10:12:14 10 12 14 16 18 20 22 24 6 8 Real GDP, Y ($, trillions) Garrow_forwardAnswer the following questions: Instructions: Enter your answers rounded to the nearest whole number. a. By how much will GDP change if firms increase their investment by $8 billion and the MPC is 0.90? $ billion...? b. If the MPC is 0.75? $ billion...?arrow_forward
- Use the diagram to answer the question which one of the following will increase the size of the multiplier? A. an increase in the level of net exports B. An increase in the marginal propensity to consume C. an increase in the marginal propensity to save D. a reduction in the level of government spendingarrow_forwardMacroeconomics Question No.2 Suppose the consumption function is given by C = 100 + 0.8YD and that I = 50, while G=200, TR=62.5 and t=0.25. What is the equilibrium level of income? What is the level of saving in equilibrium? If investment were to rise to 150, what would be the effect be on equilibrium income. What is the value of multiplier in part a. and c. Draw a diagram indicating the equilibrium in part a. and c.arrow_forward1.12 Study the following diagram and answer the question that follows. Expenditures (billions of dollars per year) > > 3500 3000 2500 2000 1500 1000 500 Figure 9.1 500 1000 1500 2000 2500 3000 3500 Income (billions of dollars per yazari At an income level of $2,000 billion, a) Consumption equals $1,500 billion. b) Saving equals $0. c) The MPC equals 0.80. d) There is dissaving. F 뉴 C connexarrow_forward
- Q1: Refer to the information provided in the Table below, answer the questions that follow: Aggregate Income ($billion) Aggregate Saving -100 150 -85 300 -70 450 -55 600 -40 a. What is the society's Marginal propensity to consume (MPC)? b. If MPC is constant, at income level of $900 billion, what would be the aggregate consumption level? c. What is the simple multiplier for this economy?arrow_forward1.How would an increase in taxes influence the size of the multiplier in a four sector model? 2.Briefly describe the concept multiplier.arrow_forwardAssume that the unintended investment is negative. Briefly outline how the level of Ye will change in response to this. how is the impact of change related to the size of the multiplier?arrow_forward
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