Homework Answers
Spending multiplier is 1/MPS. If a greater proportion of increased disposable income is saved now, then a decreased proportion of increased disposable income is consumed. This lowers the value of multiplier as the amount of leakage is increased in the circular flow. Lower is the value of multiplier if less is spent of increased income. Hence, in recessions, spending multiplier is reduced.
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--- - - -- 3. During times of recession, households tend to increase their savings out...
we W den nan ATT CATAT End untiads antaan In 3. During times of recession, households...
we W den nan ATT CATAT End untiads antaan In 3. During times of recession, households tend to increase their savings out of current disposable income. How does this affect the size of the spending multiplier?
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a....
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a. an increase in taxes and/or an increase in government spending b. an increase in taxes and/or a decrease in government spending c. a decrease in taxes and/or an increase in government spending d. a decrease in taxes and/or a decrease in government spending e. a decrease in government purchases and/or a decrease in transfer payments 2. An increase in income tax rates: a. makes...
A lt Consumers increase their savings during a recession describe the complete effect that this u have on the econo...
A lt Consumers increase their savings during a recession describe the complete effect that this u have on the economy. B How do Improvement in the level of technologyta decrease in the market interest rate affect the Investment function?
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a....
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a. an increase in taxes and/or an increase in government spending b. an increase in taxes and/or a decrease in government spending! c. a decrease in taxes and/or an increase in government spending d. a decrease in taxes and/or a decrease in government spending e. a decrease in government purchases and/or a decrease in transfer payments 2. An increase in income tax rates: a. makes...
(15) All of the following would be considered capital goods, except o a dump truck. o...
(15) All of the following would be considered capital goods, except o a dump truck. o a new factory o on-the-job training. All of the above are capital goods. (16) What are the sources of savings in the economy? Business savings and household savings Private savings by households, government savings, and savings by foreigners - The difference between income and spending of households The difference between income and spending of households and businesses (17) How is the level of investment...
According to the Bureau of Economic Analysis, during the recession of 2007 - 2009, household saving as a fraction of di...
According to the Bureau of Economic Analysis, during the recession of 2007 - 2009, household saving as a fraction of disposable personal income increased from a low of just over 1 percent in the first quarter of 2008 to 5 percent in the second quarter of 2009 All else equal, a higher saving rate would A. decrease MPC, increase MPS, and decrease the multiplier so that changes in planned investment will have a smaller impact on equilibrium output B. increase...
How does the household savings rate affect the impact on output of an increase in government...
How does the household savings rate affect the impact on output of an increase in government spending? If the rate of savings is low, the effect of the increase will be greater than it otherwise would have been. If the rate of savings is high, the effect of the increase will be greater than it otherwise would have been. If the increase in government spending is high, the effect will be large. It has no effect. An increase in taxes...
12 and 13 QUESTION 12 The difference between "saving" and "savings" is that saving is placed...
12 and 13
QUESTION 12 The difference between "saving" and "savings" is that saving is placed in financial institutions such as banks, while savings are kept at home by people. saving is done by households and savings are done by businesses. saving is undertaken as a precaution against unemployment and savings are undertaken to increase investment spending. savings are cumulation of past and current saving. QUESTION 13 Real Disposable Income per Year 1.000 2.000 3.000 4.000 5.000 6,000 7,000 8.000...
2) During a Recession, the MPC tends to a) Increase, increases b) Decrease, decreases c) Decrease,...
2) During a Recession, the MPC tends to a) Increase, increases b) Decrease, decreases c) Decrease, increases d Increase, decreases which the recessionary gap 3) Suppose that the MPC is .75 and the U.S Federal Government reduces taxes by 10 million dollars. After 3 rounds of the multiplier process RGDP will change by a) 4.23 million b) 17.34 million c) 23.13 million dollars. d) 30 million 4) "George W. Bush's $152 billion tax rebate plan of 2008 was designed to...
Check answers please ? s) If the economy is in a recession, 8) A) The economy...
Check answers please ?
s) If the economy is in a recession, 8) A) The economy suffers from structural unemployment, which can be alleviated by debt refinancing. B) Larger deficits will decrease the national debt. C) Deficit spending will not increase the size of the debt because interest rates will be falling. D) It is operating inside the production posibilities curve, and the opportunity cost of deficit spending is zero. 9 9) An increase in unemployment, ceteris paribus, A) Reduces...
we W den nan ATT CATAT End untiads antaan In 3. During times of recession, households tend to increase their savings out of current disposable income. How does this affect the size of the spending multiplier?
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a. an increase in taxes and/or an increase in government spending b. an increase in taxes and/or a decrease in government spending c. a decrease in taxes and/or an increase in government spending d. a decrease in taxes and/or a decrease in government spending e. a decrease in government purchases and/or a decrease in transfer payments 2. An increase in income tax rates: a. makes...
A lt Consumers increase their savings during a recession describe the complete effect that this u have on the economy. B How do Improvement in the level of technologyta decrease in the market interest rate affect the Investment function?
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a. an increase in taxes and/or an increase in government spending b. an increase in taxes and/or a decrease in government spending! c. a decrease in taxes and/or an increase in government spending d. a decrease in taxes and/or a decrease in government spending e. a decrease in government purchases and/or a decrease in transfer payments 2. An increase in income tax rates: a. makes...
(15) All of the following would be considered capital goods, except o a dump truck. o a new factory o on-the-job training. All of the above are capital goods. (16) What are the sources of savings in the economy? Business savings and household savings Private savings by households, government savings, and savings by foreigners - The difference between income and spending of households The difference between income and spending of households and businesses (17) How is the level of investment...
According to the Bureau of Economic Analysis, during the recession of 2007 - 2009, household saving as a fraction of disposable personal income increased from a low of just over 1 percent in the first quarter of 2008 to 5 percent in the second quarter of 2009 All else equal, a higher saving rate would A. decrease MPC, increase MPS, and decrease the multiplier so that changes in planned investment will have a smaller impact on equilibrium output B. increase...
12 and 13
QUESTION 12 The difference between "saving" and "savings" is that saving is placed in financial institutions such as banks, while savings are kept at home by people. saving is done by households and savings are done by businesses. saving is undertaken as a precaution against unemployment and savings are undertaken to increase investment spending. savings are cumulation of past and current saving. QUESTION 13 Real Disposable Income per Year 1.000 2.000 3.000 4.000 5.000 6,000 7,000 8.000...
2) During a Recession, the MPC tends to a) Increase, increases b) Decrease, decreases c) Decrease, increases d Increase, decreases which the recessionary gap 3) Suppose that the MPC is .75 and the U.S Federal Government reduces taxes by 10 million dollars. After 3 rounds of the multiplier process RGDP will change by a) 4.23 million b) 17.34 million c) 23.13 million dollars. d) 30 million 4) "George W. Bush's $152 billion tax rebate plan of 2008 was designed to...
Check answers please ?
s) If the economy is in a recession, 8) A) The economy suffers from structural unemployment, which can be alleviated by debt refinancing. B) Larger deficits will decrease the national debt. C) Deficit spending will not increase the size of the debt because interest rates will be falling. D) It is operating inside the production posibilities curve, and the opportunity cost of deficit spending is zero. 9 9) An increase in unemployment, ceteris paribus, A) Reduces...
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