Macroeconomics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280601
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
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Question
Chapter 9.A, Problem 1DQ
To determine
To describe: The meaning of multiplier.
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Assume the marginal propensity to consume is 0.8. If consumer spending rises by $20 billion, then total income through the multiplier effect will:
Increase by $100 billion
Decrease by $100 billion
Increase by $10 billion
Will not change
How do I calculate this?
A) What is the value of the marginal propensity to consume? ( Round your answers to one decimal place). What is the value of the marginal propensity to save?
B) What is the break-even level of income in the table? (Enter your answer as a whole number)
What is the term that economists use for the saving situation shown at the $ 240 level of income.
C) For each of the following items, indicate wheter the value in the table is either constant or variable as income changes:
The MPS is (constant/ variable) as income changes.
The APC is ( constant/ variable) as income changes.
The MPC is ( constant/ variable) as income changes.
The APS is (constant/ variable) as income chnages.
Chapter 9 Solutions
Macroeconomics: Principles and Policy (MindTap Course List)
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