Assume an economy with no foreign sector, a marginal propensity to save of mps = 0.1, and a marginal income tax rate of t = 1/3. What change in government purchases would lead to an increase in national income of 500?
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Assume an economy with no foreign sector, a marginal propensity to save of mps = 0.1, and a marginal income tax rate of t = 1/3. What change in government purchases would lead to an increase in
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- Assume a closed economy in which, there is no government. If autonomous consumption is80, autonomous investment is 70, and marginal propensity to save is 0.25 in this economy.Then calculate the amount of equilibrium output (income)?In a simple economy where there is no government and no international trade, the consumption function is given by the equation: C = £130m + 0.7Y What is the marginal propensity to save? a)0.7 b)1.0 c)0.3 d)130the term 'crowding out' refers to the decrease in a. consumption expenditure from an increase in investment b. the real interest rate from a government budget deficit c. foreign investment due to high public investment d. private investment from a government budget deficit e. saving from an increase in disposable income
- Suppose the consumption function is given by C(Y)=60+0.8(Y-T) where Y represents output and T stands for net taxes. Suppose further that the level of investment, I, is 400, the level of government expenditure, G, is 300, and net taxes, T, are 200. What is the value of the marginal propensity to save? a. 5 b. 0.2 c. 0.8 d. 1Consider an economy where the marginal propensity to save is 0.15; the marginal propensity to import is 0.05 and the marginal propensity to tax is 0.2. If there is an increase in government spending of $150 million, by how much would national income increase? (a) National income would increase by $350 million (b) National income would increase by $375 million (c) National income would increase by $210 million (d) National income would increase by $240 milliondescribe the impact of a 300 billion dollar increase in government spending when the marginal propensity to save is .20
- If the MPC equals 0.5, and real GDP is $14 trillion with potential real GDP $14.5 trillion, how much would governmentpurchases would need to increase by to restore the economy to potential real GDP?The marginal propensity to save is 0.2. Equilibrium GDP will decrease by $50 billion if the aggregate expenditures schedule decreases by Multiple Choice $10 billion. $250 billion. $25 billion. $5 billion.Suppose that the recent economic outlook in the country of Mountainia has been the opposite. Businesses have postponed planned investments and have begun to accumulate cash. If businesses in Mountainia postpone $12 billion of their planned investments, what would be the maximum expected change in GDP if its marginal propensity to save (MPS) is 0.05? $ billion
- As a result of this policy, the equilibrium interest rate . Which of the following statements accurately describe the effect of the increase in government borrowing? Check all that apply. National saving decreases by less than $20 billion. Private saving increases by less than $20 billion. Public saving decreases by exactly $20 billion. Investment increases by less than $20 billion. The more elastic the supply of loanable funds, the is the change in national saving as a result of the increase in government borrowing. The more elastic the demand for loanable funds, the the change in national saving as a result of the increase in government borrowing. Suppose households believe that greater government borrowing today implies higher taxes to pay off the government debt in the future. This belief would cause people to save today, which would private saving and the supply of loanable funds. This would the…The macroeconomic effects of federal investment can decrease if : a.State and local governments tax investment spending towards other non-investment areas. b.State and local governments complement federal policy by also increasing investment. c.State and local governments keep local investment spending unchanged. d.State and local governments substitute investment spending towards other non-investment areas.Suppose a closed economy has an aggregate consumption function given by C = 50 + 0.50Yd and generates $2500 output and income in equilibrium. Suppose also that the government spends 400 and imposes a lump-sum tax of 100. What is the level of intended investment?
