Suppose MPC=.8 and that G goes up by $500. What is the change in Y?
Multiplier (k)=1/1-MPC
k=1/1-.8
k=5
Change in Y=k*Change in G
Change in Y=5*500
Change in Y=2500
Suppose that Y increases $1,000 after G increases $500. What is MPC?
Suppose MPC=.75. What is the change in G if you want Y to increase by $2,000?
Suppose that consumers have an average MPC of 0.75. However, 20% of their income goes to the government in the form of taxes. Furthermore, 25% of disposable income is spent on foreign goods and services rather than domestic goods. Suppose that the government consumes $750 billion, investment is $500 billion, and exports are $250 billion. Autonomous consumption is also $500 billion. How large is the expenditure multiplier? (round to 2 decimal places)
The mpc = 0.95 and disposable income goes up by $200. This means consumption will go up by _____. 95 5 75 190
Suppose X and Y are substitutes, if the price of Y goes up: then the demand for X increases. then the demand curve for X shifts to the right: the price of X goes up. all of the above. Show transcribed image text Suppose X and Y are substitutes, if the price of Y goes up: then the demand for X increases. then the demand curve for X shifts to the right: the price of X goes up. all of...
The MPC is A) the change in consumption divided by the change in income. B) consumption divided by income. C) the change in consumption divided by the change in saving. D) the change in saving divided by the change in income. The MPS is A) the change in saving divided by the change in income. B) 1 + MPC C) income divided by saving. D) total saving divided by total income Saving equals A) Y-C. B) Y - planned 1....
Question 20 1 pts Picture a linear consumption function of the form C-CO+MPC (Y-T). Which of these statements is true? O A fall in the unemployment rate creates greater certainty about future income, lowering Co. O An increase in interest rates will lower consumption by raising MPC. When household wealth goes up. Co goes up O An increase in taxes lowers MPC, thus reducing consumption
if the mpc is 0.75 what is the size of the multiplier and the total change in real gdp demanded following a $10 billion increase in spending?
11 of 20 (8 complete) is Test 20 pts possib Suppose that in an econormy MPC is estimated lo be 0.75 Congress has decided that 30 percent of an increase in a spedfic govemment expenditure initiative (G) must be covered by an increase in taxes (T). Both G and T are independent of income. For this economy, the net value of the govemment spending mutiplier is(Enter your response rounded to two decimal places) Enter your answer in the answer box
1. Suppose that the MPC=.75. If the government was to increase equilibrium output by $10,000, by how much should they increase government spending? 2. This question considers the link between the IS-LM model and the AD-AS model. Suppose the Fed increases the money supply. This causes the _________ curve to shift _______, which causes aggregate demand to shift ___________. Finally, equilibrium output _________ as a result. 3.Use the IS-LM diagram to answer the following: If the Fed increases the money...