ECO 2302 PRIN MACO W/MYECO ACC >IP<
4th Edition
ISBN: 9781323504161
Author: CASE
Publisher: PEARSON C
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Question
Chapter 8, Problem 5.3P
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?
Very 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?
Suppose that an initial $10 billion increase in investment spending expands GDP by $10 billion in the first round of the multiplier process. Also suppose that GDP and consumption both rise by $6 billion in the second round of the process.
what is the MPC?
What is the size of the Multiplier?
If, instead, GDP and consumption both rose by $8 billion in the second round, what would have been the size of the multiplier?
Chapter 8 Solutions
ECO 2302 PRIN MACO W/MYECO ACC >IP<
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- Chapter 9 6.Use the following table to answer these questions: Y C I G X $ 500 $ 500 $ 10 $ 20 $ 60 $ 600 $ 590 $ 10 $ 20 $ 40 $ 700 $ 680 $ 10 $ 20 $ 20 $ 800 $ 770 $ 10 $ 20 $ 0 $ 900 $ 860 $ 10 $ 20 - $ 20 $ 1,000 $ 950 $ 10 $ 20 - $ 40 a. What is the MPC? b. What is the MPS? c. What is the MPI? d. What is the level of aggregate expenditures at each level of income? e. Graph the aggregate…arrow_forwardSuppose that an initial $ 10 billion increase in investment spending expands GDP by $ 10 billion in the first round of the multiplier process. Also suppose that GDP and consumption both rise by $ 6 billion in the second round of the process. Instructions: In parts a and b, round your answers to 1 decimal place. In part c enter your answer as a whole number. A) What is the MPC in this economy? B) What is the size of the multiplier? C) If, instead, GDP and consumption both rose by $ 8 billion in the second round, what would have been the size of the multiplier?arrow_forwardQ-1 The following table shows income and consumption: Calculate: A- Saving (S), B- Marginal propensity to consume (MPC), C-Marginal propensity to save (MPS), D- Average propensity to consume (APC) E- Average propensity to save (APS).arrow_forward
- How is it possible for investment spending to increase even in a period in which the real interest rate rises? 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?arrow_forwardSuppose that the initial 10 billion increase in the investment spending expands GDP by 10 billion in the first round of multiplier process. If GDP and consumption both rise by 6 billion in the second round of the process, what is the MPC in this economy? What is the size of the multiplier? If instead, GP and consumption both Rose by 8 billion in the second round, what would’ve been the size of the multiplier? arrow_forwardHi there . can you please assit on the following below Q.1. HOW DOES GOVERNMENT SPENDING AFFECT THE LEVEL OF AGGREGATE AUTONOMOUS SPENDING , THE MULTIPLIER AND THE EQUILIBRIOUM INCOME IN THE ECONOMY?arrow_forward
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