MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Chapter 8, Problem 17SQ
To determine
The 45-degree line in the exhibit.
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In the third quarter of 2008, investment in the U.S. totaled $4,2 trillion and in 2007, investment was $1,4 trillion. In addition, third quarter of 2007 real GDP was $48 trillion. Suppose the MPC in the U.S. is 0.80. Ignoring all other changes in spending, what is the new real GDP?
Assume that the consumption function for the above economy is C = 1000 + .75Yd fill in the empty cells. (All Figures are in Billions of Dollars)
Output
Taxes
Disposable Income
Consumption Spending
Saving
Investment
Government
Aggregate
Expenditure
5000
1000
750
750
7000
1000
750
750
9000
1000
750
750
Calculate the value of final Consumption Expenditure when the value of national income is $5000 , autonomous consumption is $1000 and marginal propensity to consume is 0.8
Chapter 8 Solutions
MACROECONOMICS FOR TODAY
Ch. 8.4 - Prob. 1YTECh. 8 - Prob. 1SQPCh. 8 - Prob. 2SQPCh. 8 - Prob. 3SQPCh. 8 - Prob. 4SQPCh. 8 - Prob. 5SQPCh. 8 - Prob. 6SQPCh. 8 - Prob. 7SQPCh. 8 - Prob. 8SQPCh. 8 - Prob. 9SQP
Ch. 8 - Prob. 1SQCh. 8 - Prob. 2SQCh. 8 - Prob. 3SQCh. 8 - Prob. 4SQCh. 8 - Prob. 5SQCh. 8 - Prob. 6SQCh. 8 - Prob. 7SQCh. 8 - Prob. 8SQCh. 8 - Prob. 9SQCh. 8 - Prob. 10SQCh. 8 - Prob. 11SQCh. 8 - Prob. 12SQCh. 8 - Prob. 13SQCh. 8 - Prob. 14SQCh. 8 - Prob. 15SQCh. 8 - Prob. 16SQCh. 8 - Prob. 17SQCh. 8 - Prob. 18SQCh. 8 - Prob. 19SQCh. 8 - Prob. 20SQ
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- MPC and MPS measure changes in consumption expenditure and saving that result from changes ?. A. expected inflation. (b) disposable income. (c). expected future income. (d)governmente expenditure on goods and services.arrow_forwardThe economy is characterized by the consumption function C = C(Y − T) = 500 + 0.75 (Y − T). If income increases by 100, and taxes increase by 20, then consumption will increase by: 40 80 60 375arrow_forwardAssume that the consumption function for the above economy is C = 1000 + .75Yd fill in the empty cells. (All Figures are in Billions of Dollars) (3 Points) Output Taxes Disposable Income Consumption Spending Saving Investment Government Aggregate Expenditure 5000 1000 750 750 7000 1000 750 750 9000 1000 750 750arrow_forward
- Suppose real GDP exceeds potential real GDP. If the government decreases its expenditures on goods and services, then real GDP _______and the price level ________ (a) Decreases; rises (b) Increases; falls (c) Decreases; falls (d) Increases, risesarrow_forwardWhen the economy is operating at the equilibrium level of? GDP, we know that A. total planned real consumption expenditures equal real GDP. B. total planned real expenditures equal real GDP. C. planned real investment spending equals real net exports of zero. D. real net exports equal inventory changes.arrow_forwardWhich of the following statements is most accurate? a.Most of the variation in consumption spending can be explained by changes in debt b. There is no single factor that explains much of the variation in consumption spending c. Most of the variation in consumption spending can be explained by changes in the interest rate. d. Most of the variation in consumption spending can be explained by changes in wealth e. most of the variation in consumption spending can be explained by changes in disposable income.arrow_forward
- Q.1.14 In the Keynesian model, what is the most important determinant of a household’s consumption?(a) Disposable income.(b) Total wealth.(c) The number of persons in the household.(d) Its’ net wealth.arrow_forwardSuppose real GDP is $5,361 billion, taxes collected by the government are $528 billion, government spending is $669 billion, and consumption spending is $3,797 billion. If the economy is closed, what is the value of investment spending? Enter a whole number with no dollar sign and please do not include the word billion.arrow_forwardWhich of the following will NOT lead to an increase in real GDP? A. On average, people in a country decide to increase the number of hours they work by 5%. B. Spending on homeland security increases in response to a terrorist attack. C. The price level and nominal GDP increase by 10%. D. Due to lower interest rates by the Fed investors increase their investmenarrow_forward
- Historically, the change in real GDP during recessions has been a. mostly a change in investment spending.b. mostly a change in consumption spending.c. about equally divided between consumption and investment spending.d. sometimes mostly a change in consumption and sometimes mostly a change in investment.arrow_forwardIf the government decreases taxes, disposable income does not change. falls. increases. This causes total consumer spending to not change. increase. decrease.arrow_forwardNational income accounting (GDP calculate) is an essential part of macroeconomics. Analyse the following hypothetical economy and answer the questions that follow: G = 400, I = 70, X = 300, M =100, autonomous consumption = 100, MPC = 0.6, taxes=50 Calculate the level of national income in this economy What percentage of disposable income do people save? Calculate the level of savings Show that in this economy, injections are indeed equal to withdrawals Calculate the multiplier? Using the multiplier in v above, what would be the new level of national income if government spending rose to 500?arrow_forward
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