Homework Answers
Answer: d. $130 billion
Increase in investment spending = Increase in GDP / multiplier
= $520/ 4
= $130
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If the multiplier is 4 and real GDP increases by S520 billion, the increase in investment...
Initial increase in business spending by 15 billion, increase real GDP from $ 100 billion to...
Initial increase in business spending by 15 billion, increase real GDP from $ 100 billion to $ 160 billion. Calculate multiplier. Discuss the relationship between investment (business spending) and multiplier. Minimum 150 words with proper refences and citation.
decrease in personal taxes from $100 billion to 580 billion will increase real GDP 11. If...
decrease in personal taxes from $100 billion to 580 billion will increase real GDP 11. If the MPC -0.75, a decrease in person by A) $20 billion. B) $40 billion. C) $60 billion. D) $80 billion. Table 10.1 Consumption C - $1.0+ 0.80YD Investment $1.5 Government purchases $2.2 Net exports Taxes Government transfer payments $0 (all values are in billions of dollars) 2, 12. Refer to Table 10.1. Equilibrium real GDP for this economy is equal to A) $5.75 billion....
Problem 30-10 Suppose that an initial $10 billion increase in investment spending expands GDP by $10...
Problem 30-10 Suppose that an initial $10 billion increase in investment spending expands GDP by $10 billion in the first round of the multiplier process. Also suppose that GDP and consumption both rise by $6 billion in the second round of the process. Instructions: In parts a and b, round your answers to 1 decimal place. In part c, enter your answer as a whole number. a. What is the MPC in this economy? b. What is the size of...
What will happen to real GDP given a $30 billion increase in the money supply under...
What will happen to real GDP given a $30 billion increase in the money supply under the following assumptions? Each $5 billion increase in the money supply reduces the rate of interest by 0.50 percentage point. Each 1 percentage point decline in interest rates stimulates $100 billion worth of new investment. The spending multiplier is 2.5. Assume that the aggregate supply curve is so flat that the price level does not rise noticeably when aggregate demand increases.
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...
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
Investment Problem: 1. Assume the MPC is 3/4, if investment spending increase by $50 billion, the...
Investment Problem: 1. Assume the MPC is 3/4, if investment spending increase by $50 billion, the level of GDP will: 2. Assume the MPC is 2/3, if investment spending decreases by $30 billion, the level of GDP will: Export Problem: 3. If the multiplier in an economy is 4, a $50 billion increase in exports will: 4. If the multiplier in an economy is 3,a $30 billion decrease in exports will: Balanced Budget Problem: 5. If the MPC is .75...
If the spending multiplier equals 5 and equilibrium income is $2 billion below potential GDP. then...
If the spending multiplier equals 5 and equilibrium income is $2 billion below potential GDP. then other things being equal, to reach the potential real GDP level. autonomous spending needs to increase by $0.1 billion nominal GDP needs to increase by $1.2 billion autonomous spending needs to decrease by $6 billion nominal GDP needs to decrease by $12 billion autonomous spending needs to increase by $0.4 billion
1. From a Keynesian perspective, the meager growth of real GDP during the current decade is...
1. From a Keynesian perspective, the meager growth of real GDP during the current decade is the result of A. lower government spending. B. a decline in investment spending. C. reduced personal consumption. D. All of the above. 2. From a Keynesian perspective, the meager growth of real GDP during the current decade is the result of a A. leftward shift of the investment function. B. movement down along the investment function. C. rightward shift of the investment function. D....
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....
Initial increase in business spending by 15 billion, increase real GDP from $ 100 billion to $ 160 billion. Calculate multiplier. Discuss the relationship between investment (business spending) and multiplier. Minimum 150 words with proper refences and citation.
decrease in personal taxes from $100 billion to 580 billion will increase real GDP 11. If the MPC -0.75, a decrease in person by A) $20 billion. B) $40 billion. C) $60 billion. D) $80 billion. Table 10.1 Consumption C - $1.0+ 0.80YD Investment $1.5 Government purchases $2.2 Net exports Taxes Government transfer payments $0 (all values are in billions of dollars) 2, 12. Refer to Table 10.1. Equilibrium real GDP for this economy is equal to A) $5.75 billion....
Problem 30-10 Suppose that an initial $10 billion increase in investment spending expands GDP by $10 billion in the first round of the multiplier process. Also suppose that GDP and consumption both rise by $6 billion in the second round of the process. Instructions: In parts a and b, round your answers to 1 decimal place. In part c, enter your answer as a whole number. a. What is the MPC in this economy? b. What is the size of...
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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
If the spending multiplier equals 5 and equilibrium income is $2 billion below potential GDP. then other things being equal, to reach the potential real GDP level. autonomous spending needs to increase by $0.1 billion nominal GDP needs to increase by $1.2 billion autonomous spending needs to decrease by $6 billion nominal GDP needs to decrease by $12 billion autonomous spending needs to increase by $0.4 billion
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