uestion #1:Solving for the Goods
MarketSuppose an economy can be described by the following set of
equations:C = 160+(0.6)YDI = 150G = 150T = 100YD= Y -TNX = 0 (g)
What is the marginal propensity to consume (mpc)?(h) What is the
marginal propensity to save (mps)?(i) Calculate the multiplier.
[Hint: The multiplier = 1/(1-mpc)](j) Calculate the level of
autonomous spending. [Hint: Autonomous spending = C0+ I + G –(mpc x
T)]
Homework Answers
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uestion #1:Solving for the Goods
MarketSuppose an economy can be described by the following set of...
+ 0.6* Y, and I-$900. Assume that the following equations fully describe an economy: C =...
+ 0.6* Y, and I-$900. Assume that the following equations fully describe an economy: C = $400 I) (1.5 pts.) How much is the Marginal Propensity to Consume (MPC) for this economy? 2) (1.5 pts.) How much is the Marginal Propensity to Save (MPS) for this economy? (4 pts.) W hat is the equilibrium level of income?
Answer the following questions using the aggregate expenditures model of the economy described below. C =...
Answer the following questions using the aggregate expenditures model of the economy described below. C = 900 + 0.5 Yd T=95 1 = 300 G = 300 X = 350 M = 0.1 Y (a) What are the marginal propensity to consume Number , and the marginal propensity to import Number (b) What is the marginal propensity to save? Number (c) The saving function is: S = Number + Number Yd. (d) What is the value of Ye? Number (e)...
10.) An economy has a marginal propensity to consume and Y* , income-expenditure equilibrium GDP,...
10.) An economy has a marginal propensity to consume and Y* , income-expenditure equilibrium GDP, equals $500 billion. Given an autonomous increase in plannėd investment of $10 billion, show the rounds of increased spending that take place by completing the accompanying table. The first and second rows are filled in for you. In the first row the increase of planned investment spending of $10 billion raises real GDP and YD by $10 billion, leading to an increase in consumer spending...
The following table shows alternative hypothetical economies and the relevant values for the marginal propensity to...
The following table shows alternative hypothetical economies and the relevant values for the marginal propensity to consume out of disposable income (MPC), the net tax rate (t), and the marginal propensity to import (m). a. Recall that z, the marginal propensity to spend out of national income, is given by the simple expression Z-MPC(1-1)-m. By using this expression, compute z and the simple multiplier for each of the economies and fill in the table. (Round your response to two decimal...
Question 3 1.5 pts The aggregate demand of an open economy is given by the after-tax...
Question 3 1.5 pts The aggregate demand of an open economy is given by the after-tax domestic consumption C, the investment I (which depends on the interest rater), the government spending G and net exports X-M: AD-C+I+G+X-M=CO+ c1 (1 - t)Y + I(r) +G+X-mY Co is autonomous consumption.c, is the marginal propensity to consume, and m is the marginal propensity to import. In the economy's equilibrium this equals its output: AD - Y. Solving for Y yields: y=(1/(1-c1(1 – t)...
If the marginal propensity to consume (MPC) in your classmate's nation is 3/5 and the marginal...
If the marginal propensity to consume (MPC) in your classmate's nation is 3/5 and the marginal propensity to save (MPS) in your country is 1/10, which of the following must be true? a. Autonomous consumption is lower in your classmate's nation than in your country. b. Autonomous consumption is higher in your classmate's nation than in your country. c. The spending multiplier is smaller in your classmate's nation than in your country. d. Total consumption is lower in your classmate's...
17. Keynesian consumption function: a) C = C + mpcy b) I = I c)t 18....
17. Keynesian consumption function: a) C = C + mpcy b) I = I c)t 18. Keynesian government spending multiplier a) AC b) AY = AG c) mpc 19. Keynesian fiscal policy in a closed economy: considering that AE =C+I+G + mpc(1 - ty! where t is the tax rate, the government could increase the aggregate expenditure a) increasing the tax rate b) reducing the tax rate 20. If the marginal propensity to consume (mpc) increase, the Keynesian multiplier effect...
Aggregate expenditure is total value added in the economy income of households, businesses, governments, and foreigners....
Aggregate expenditure is total value added in the economy income of households, businesses, governments, and foreigners. revenue from the sale of goods and services. spending on final goods and services. The MPC can be defined as the change in consumption divided by the change in income. change in income divided by the change in consumption. ratio of income to saving. ratio of saving to consumption. The relationship between the MPS and the MPC is such that MPC - MPS =...
1. If the MPS = 0.2, then the multiplier equals: * 4 5 9 10 2....
1. If the MPS = 0.2, then the multiplier equals: * 4 5 9 10 2. Suppose that a financial crisis decreases investment spending by $200 billion and the marginal propensity to consume is 0.75. Assuming no taxes and no trade, real GDP will _____ by _____. decrease; $500 billion decrease; $200 billion decrease; $800 billion increase; $400 billion 3. An increase in the marginal propensity to consume: increases the multiplier. shifts the autonomous investment line upward. decreases the multiplier....
Assignment Score: 13.7% Resources Hint Check Answer « Question 9 of 21 Place the items about...
Assignment Score: 13.7% Resources Hint Check Answer « Question 9 of 21 Place the items about marginal propensity to consume (MPC), the multiplier, and economic stability into true and false boxes, The Keynesian cross model is another name for the aggregate expenditures model. True False Answer Bank In general, people consume more than they save. MPC + MPS = 1 Macroeconomic policy has a larger effect when the multiplier is higher. MPC 1 MPC is constant in the Keynesian cross...
+ 0.6* Y, and I-$900. Assume that the following equations fully describe an economy: C = $400 I) (1.5 pts.) How much is the Marginal Propensity to Consume (MPC) for this economy? 2) (1.5 pts.) How much is the Marginal Propensity to Save (MPS) for this economy? (4 pts.) W hat is the equilibrium level of income?
Answer the following questions using the aggregate expenditures model of the economy described below. C = 900 + 0.5 Yd T=95 1 = 300 G = 300 X = 350 M = 0.1 Y (a) What are the marginal propensity to consume Number , and the marginal propensity to import Number (b) What is the marginal propensity to save? Number (c) The saving function is: S = Number + Number Yd. (d) What is the value of Ye? Number (e)...
10.) An economy has a marginal propensity to consume and Y* , income-expenditure equilibrium GDP, equals $500 billion. Given an autonomous increase in plannėd investment of $10 billion, show the rounds of increased spending that take place by completing the accompanying table. The first and second rows are filled in for you. In the first row the increase of planned investment spending of $10 billion raises real GDP and YD by $10 billion, leading to an increase in consumer spending...
The following table shows alternative hypothetical economies and the relevant values for the marginal propensity to consume out of disposable income (MPC), the net tax rate (t), and the marginal propensity to import (m). a. Recall that z, the marginal propensity to spend out of national income, is given by the simple expression Z-MPC(1-1)-m. By using this expression, compute z and the simple multiplier for each of the economies and fill in the table. (Round your response to two decimal...
Question 3 1.5 pts The aggregate demand of an open economy is given by the after-tax domestic consumption C, the investment I (which depends on the interest rater), the government spending G and net exports X-M: AD-C+I+G+X-M=CO+ c1 (1 - t)Y + I(r) +G+X-mY Co is autonomous consumption.c, is the marginal propensity to consume, and m is the marginal propensity to import. In the economy's equilibrium this equals its output: AD - Y. Solving for Y yields: y=(1/(1-c1(1 – t)...
17. Keynesian consumption function: a) C = C + mpcy b) I = I c)t 18. Keynesian government spending multiplier a) AC b) AY = AG c) mpc 19. Keynesian fiscal policy in a closed economy: considering that AE =C+I+G + mpc(1 - ty! where t is the tax rate, the government could increase the aggregate expenditure a) increasing the tax rate b) reducing the tax rate 20. If the marginal propensity to consume (mpc) increase, the Keynesian multiplier effect...
Assignment Score: 13.7% Resources Hint Check Answer « Question 9 of 21 Place the items about marginal propensity to consume (MPC), the multiplier, and economic stability into true and false boxes, The Keynesian cross model is another name for the aggregate expenditures model. True False Answer Bank In general, people consume more than they save. MPC + MPS = 1 Macroeconomic policy has a larger effect when the multiplier is higher. MPC 1 MPC is constant in the Keynesian cross...
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