Homework Answers
Multiplier = 1/1-MPC = 1/1-0.75 = 1/0.25 = 4
The government increases education spending by 30 billion
so, the consumption will increase by 30*4 = 120 billion
Additional consumption = 120-30 = 90 billion
Add Answer to:
3. Suppose the government increases education spending by $30 billion. How much additional consumption will this...
7. If consumption increases by $400 Billion and incomes increase by $500 Billion in a year,...
7. If consumption increases by $400 Billion and incomes increase by $500 Billion in a year, what can we say about the marginal propensity to consume? 8. If the dollar were to strengthen against other world currencies, explain the effect this would have on net exports. 9. With an MPC of.9, what would the change in GDP be if Government Spending increased by $500 Million?
If the marginal propensity to consume (MPC) is 2/3 and investment spending increases by $2 billion,...
If the marginal propensity to consume (MPC) is 2/3 and investment spending increases by $2 billion, the level of real output (GDP) will: increase by $10 billion. O increase by $3 billion. increase by $6 billion. O Increase by $8 billion
Suppose economists observe that an increase in government spending of $5 billion raises the real aggregate...
Suppose economists observe that an increase in government spending of $5 billion raises the real aggregate output level by $20 billion. (a) In the absence of the crowding out effect, what would the numerical value of marginal 1. propensity to consume (MPC)? (b) Now suppose the crowding-out effect also comes to play.Should the new numerical value of marginal propensity to consume (MPC) be larger or smaller than that of your answer in part (a)? Explain. (Hint: the multiplier effect and...
Suppose that Congress and the President are considering an increase in government expenditures of $50 billion....
Suppose that Congress and the President are considering an increase in government expenditures of $50 billion. They consult with two economists: Alan and Robert. Alan believes that the marginal propensity to consume (MPC) is 0.9 and Robert believes that it is 0.5 If Alan is correct, then the increase in government spending will cause GDP to increase by ____, and if Robert is correct, then the government spending increase will cause GDP to increase by ____ (B) A. $450 billion,...
If the marginal propensity to consume (MPC) equals 0.25 and the government increases spending by $600...
If the marginal propensity to consume (MPC) equals 0.25 and the government increases spending by $600 billion, the total impact on GDP will be approximately:
Suppose the marginal propensity to consume is 0.8. The government increases government spending and taxes by...
Suppose the marginal propensity to consume is 0.8. The government increases government spending and taxes by $10 billion. What happens to aggregate output demanded?
1.) If the marginal propensity to consume is 0.75 and investment spending increases by $200 billion,...
1.) If the marginal propensity to consume is 0.75 and investment spending increases by $200 billion, equilibrium GDP will increase by____. $350 billion $150 billion $200 billion $266.7 billion $800 billion 2.) AE = 3000 + 0.75*RGDP. Given this equation for AE, find equilibrium GDP $1,000 $750 $12,000 $2,250 3.) The four components of aggregate planned expenditure are the real interest rate, disposable income, wealth, and expected future income the real interest rate, consumption expenditure, investment, and government expenditures consumption...
QUESTION 21 Suppose investment spending initially increases by $50 billion in an economy whose MPC is...
QUESTION 21 Suppose investment spending initially increases by $50 billion in an economy whose MPC is 2/3. By how much will this ultimately change real GDP? O A $75 billion OB. $50 billion OC $ 150 billion D. $ 200 billion QUESTION 22 Which of the following statements is FALSE? O A When income increases MPS is constant When income increases APS Increases C. When income increases MPC is increases D. When income increases APC decreases QUESTION 23 If the...
Suppose that investment expenditures increases by $300 billion in a closed and private economy (no government...
Suppose that investment expenditures increases by $300 billion in a closed and private economy (no government or foreign trade). Assume further that households have a marginal propensity to consume of 75 percent. What will be the final cumulative impact on spending? $900 billion $225 billion $375 billion $525 billion
The federal government decides to stimulate the economy and increases government expenditure on new infrastructure projects...
The federal government decides to stimulate the economy and increases government expenditure on new infrastructure projects by 90 billion. The marginal propensity to consume is MPC = 0.3 and the marginal propensity to import is MPI = 0.08. Suppose the crowding-out effect is twice the amount of government spending, what is the change in output caused by the stimulus package of 90 billion in a closed economy?
7. If consumption increases by $400 Billion and incomes increase by $500 Billion in a year, what can we say about the marginal propensity to consume? 8. If the dollar were to strengthen against other world currencies, explain the effect this would have on net exports. 9. With an MPC of.9, what would the change in GDP be if Government Spending increased by $500 Million?
If the marginal propensity to consume (MPC) is 2/3 and investment spending increases by $2 billion, the level of real output (GDP) will: increase by $10 billion. O increase by $3 billion. increase by $6 billion. O Increase by $8 billion
Suppose economists observe that an increase in government spending of $5 billion raises the real aggregate output level by $20 billion. (a) In the absence of the crowding out effect, what would the numerical value of marginal 1. propensity to consume (MPC)? (b) Now suppose the crowding-out effect also comes to play.Should the new numerical value of marginal propensity to consume (MPC) be larger or smaller than that of your answer in part (a)? Explain. (Hint: the multiplier effect and...
If the marginal propensity to consume (MPC) equals 0.25 and the government increases spending by $600 billion, the total impact on GDP will be approximately:
QUESTION 21 Suppose investment spending initially increases by $50 billion in an economy whose MPC is 2/3. By how much will this ultimately change real GDP? O A $75 billion OB. $50 billion OC $ 150 billion D. $ 200 billion QUESTION 22 Which of the following statements is FALSE? O A When income increases MPS is constant When income increases APS Increases C. When income increases MPC is increases D. When income increases APC decreases QUESTION 23 If the...
Most questions answered within 3 hours.
-
(CO 2) A field can be added to a report to
values for two or more...
asked 1 hour ago -
Identify 3 research scenarios that might provide a low,
medium, and high degree of variability in...
asked 1 hour ago -
how
does gravity affect the trajectory of projectile? what would be the
shape of the trajactory...
asked 2 hours ago -
Two small plastic spheres are given positive electrical charges.
When they are a distance of 15.4...
asked 2 hours ago -
An acidic solution containing gold ions is
electrolyzed, producing gaseous oxygen (from water) at the anode...
asked 2 hours ago -
Assume that the population of Mexico is 128
million and that the population increases 1.01
percentannually....
asked 3 hours ago -
Can someone please help me add appropriate descriptive
comments to each line of code in the...
asked 3 hours ago -
Romeo wishes to throw a bouquet of flowers to Juliet, who is on
a second-story balcony,...
asked 4 hours ago -
Why is QE a controversial monetary policy tool.
A. It may lead to excessive inflation.B. By...
asked 5 hours ago -
Principles of Programming midterm study guide help!
1.)
______ Which of the following would reference the...
asked 4 hours ago -
A finite potential well has depth U0 = 2.78 eV . What is the
penetration distance...
asked 5 hours ago -
1. The bus bars of a power station are in two sections A and B
separated...
asked 5 hours ago