ECON: MACRO4 (with CourseMate, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
4th Edition
ISBN: 9781285423623
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 9, Problem 5.10PA
To determine
The increase in the government expenditure required to increase the real GDP by $1 trillion with the given MPC.
Concept Introduction:
Marginal Propensity to Consume (MPC) - It refers to the fraction of the disposable income which is spent as induced consumption or personal consumption spending consequent upon an increase in the personal income of the consumers.
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Question 9
15
Table 2 shows the components of aggregate demand in an economy which is
in equilibrium.
Table 2
£ billion
Consumer expenditure
1000
Investment
200
Government expenditure
350
Exports
150
Imports
200
If imports increase to £230 billion and the multiplier is 1.5, then the new level of national
income would be
A £1155 billion
B £1455 billion
C £1545 billion
D £1845 billion
0000
[1 ma
3
Chapter 9 Solutions
ECON: MACRO4 (with CourseMate, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
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