why a bigger c causes bigger government purchases multiplier？
Homework Answers
This is because the multiplier value equals (1/1-c) , where c lier between 0 and 1. c represents the marginal propensity to consume. Higher value of c indicates that consumers spend a higher par part of their incremental income. Example , c = 0.2 the value of multiplier equals (1/1-0.2) which is 5/4 that is 1.25 .
And if c equals 0.8 , multiplier value equals (1/1-0.8) that is a value of 5. So as c increased the value of multiplier also increased.
The multiplier effect of government purchases of goods and services: is useful for recessions but not...
The multiplier effect of government purchases of goods and services: is useful for recessions but not for inflation. O is a type of automatic stabilizer. has a less direct and smaller impact than an equal amount of tax changes. Ohas a more direct and bigger impact than an equal amount of tax changes.
All else equal, how would an increase in the tax rate affect the government purchases multiplier?...
All else equal, how would an increase in the tax rate affect the government purchases multiplier? A. It increases the multiplier only if the marginal propensity to consume if the MPC is greater than the tax rate. B. It has no effect. C. It increases the multiplier only if the marginal propensity to consume (MPC) is less than the tax rate. D. It increases the government purchases multiplier. E. It decreases the government purchases multiplier.
Why does a $1 increase in government purchases lead to more than a $1 increase in...
Why does a $1 increase in government purchases lead to more than a $1 increase in income and spending? O O A Through the government purchases multiplier, the $1 increase in government spending will lead to a decrease in aggregate demand and national income, which will lead to a decrease in induced spending B. Through the government purchases multiplier, the $1 increase in government spending will lead to an increase in aggregate demand and national income, which will lead to...
If the MPC = 0.75, then the government purchases multiplier is about Group of answer choices...
If the MPC = 0.75, then the government purchases multiplier is about Group of answer choices 3 4 1.33 7
If the marginal propensity to consume is 2/3, then the government purchases multiplier is Use letters...
If the marginal propensity to consume is 2/3, then the government purchases multiplier is Use letters in alphabetical order to select options A 2 B 0.33 C 1.67 D 3
c. If government purchases increase to $115, what is the new equilibrium income? What is the...
c. If government purchases increase to $115, what is the new equilibrium income? What is the multiplier for government purchases? Aggregate Demand I - Work It Out Question 1 In the Keynesian cross model, assume that the consumption function is given by C = $170 +0.7(Y-T) Planned investment is $100; government purchases and taxes are both $100. new Y= $ multiplier:
Consider the previous increase in government purchases today. (a) What is the impact on the IS...
Consider the previous increase in government purchases today. (a) What is the impact on the IS curve assuming that there is a multiplier effect involved? Can you mention a reason why the multiplier can be high? (b) What is the impact on the IS curve assuming that the Ricardian equivalence holds? Explain why. (c) How are the intercept and the slope of the IS curve different in cases (b) and (c) above?
Answer the following: a. MPC = .7.What is the government spending multiplier? = 1/1-0.7 = 10/3 =...
Answer the following: a. MPC = .7.What is the government spending multiplier? = 1/1-0.7 = 10/3 = 3.33 b. MPC = .85.What is the tax multiplier? = -(0.85/1-0.85) = -17/3 = -5.67 c. If the government spending multiplier is 5, what is the tax multiplier? d. If the tax multiplier is -3, what is the government spending multiplier? e. If government purchases and taxes are increased by $150 billion simultaneously, what will the effect be on equilibrium output (income)?
od luck! DQuestion 16 2 pts The government-purchases multiplier indicates how much response to a $1...
od luck! DQuestion 16 2 pts The government-purchases multiplier indicates how much response to a $1 change in government purchases changes in O the real money balance O consumption O the budget deficit O output Previous | Next Question 17 2 pts When real exchange rates increase, net exports O decrease increase increase then decrease O decrease then increase Next Previous
is the sum of consumption purchases (C), investment purchases (I), government purchases (G), and net exports...
is the sum of consumption purchases (C), investment purchases (I), government purchases (G), and net exports (X - M). Why do you think economic forecasters focus so much on consumption purchases and their determinants?
The multiplier effect of government purchases of goods and services: is useful for recessions but not for inflation. O is a type of automatic stabilizer. has a less direct and smaller impact than an equal amount of tax changes. Ohas a more direct and bigger impact than an equal amount of tax changes.
Why does a $1 increase in government purchases lead to more than a $1 increase in income and spending? O O A Through the government purchases multiplier, the $1 increase in government spending will lead to a decrease in aggregate demand and national income, which will lead to a decrease in induced spending B. Through the government purchases multiplier, the $1 increase in government spending will lead to an increase in aggregate demand and national income, which will lead to...
c. If government purchases increase to $115, what is the new equilibrium income? What is the multiplier for government purchases? Aggregate Demand I - Work It Out Question 1 In the Keynesian cross model, assume that the consumption function is given by C = $170 +0.7(Y-T) Planned investment is $100; government purchases and taxes are both $100. new Y= $ multiplier:
od luck! DQuestion 16 2 pts The government-purchases multiplier indicates how much response to a $1 change in government purchases changes in O the real money balance O consumption O the budget deficit O output Previous | Next Question 17 2 pts When real exchange rates increase, net exports O decrease increase increase then decrease O decrease then increase Next Previous
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