Homework Answers
Ans is A
Multiplier=1/1-Mpc=1/mps
The larger the value of MPS the smaller the value of government spending multiplier
slope of consumption curve=mpc
slope of saving curve=mps
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The larger the value of MPS, the: Smaller the value of the government spending multiplier. Larger...
If the consumption function is C = $600 +0.9Y), the MPS is the government spending multiplier...
If the consumption function is C = $600 +0.9Y), the MPS is the government spending multiplier is and the tax multiplier is O 0.9; 10;-) O 0.9;-9:10 O 0.1;-9:10 O 0.1:10:-9
5. Let C=120+0.6Yd, I=140, G=200, T=100. (a) What are government spending multiplier, tax multiplier, and balanced-budget...
5. Let C=120+0.6Yd, I=140, G=200, T=100. (a) What are government spending multiplier, tax multiplier, and balanced-budget multiplier? 0) What are be supue com (b) What are the output, consumption, saving, and budget deficit at the equilibrium? pusa aning and budget details equivat (c) What are the output, consumption, and saving if the government changes the budget deficit to zero by a change in G. G decreases 100 (d) What are the output, consumption, and saving if the government changes the...
(1) Calculate the government spending multiplier if, an increase in government spending by $5 million increases...
(1) Calculate the government spending multiplier if, an increase in government spending by $5 million increases real GDP by $20 million. Group of answer choices 0.20 0.25 2 5 4 (2) A major benefit of automatic stabilizers is that they: Group of answer choices guarantee a balanced budget over the course of the business cycle. have a tendency to reduce the national debt. moderate the effect of fluctuations in the business cycle. require legislative review by Congress before they can...
refer to table 24.6. the value of the government spending multiplier QUESTI 17 Refer to the...
refer to table 24.6. the value of the government spending
multiplier
QUESTI 17 Refer to the information provided in Table 24.6 below to answer the question(s) that follow. Output (Income 2,400 2.500 3,000 3,200 3,400 3,600 3,800 Table 24.6 All Figures in Billions of Dollars Consumption Planned Net Spending Investment Government Taxes (C-100+ 9Yd Savings Purchases Spending 100 2,170 2,530 2,710 2,890 3,070 3.250 8R888R 8888888 Refer to Table 24.6. The value of the government spending multiplier is 10. is...
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....
Question 18 6 pts If the consumption function is C - $250 +0.75(Y), the MPS is__,...
Question 18 6 pts If the consumption function is C - $250 +0.75(Y), the MPS is__, the government spending multiplier is multiplier is and the tax O 0.25: -3,4 0.25:4:-3 O 0.75:-3;4 O 0.75; 4;-3
13. The reason for the multiplier effect is that a. one person's additional expenditure constitutes a...
13. The reason for the multiplier effect is that a. one person's additional expenditure constitutes a new source of income for another person, and this additional income leads to still more spending, and so on. b. changes in government spending typically deepen recessions or exacerbate inflationary conditions in the economy. c. businesses make decisions about investment projects based on anticipated profits. d. additional spending lowers the real interest rate and leads to further borrowing and spending by businesses. 14. If...
Why is the multiplier for a change in taxes smaller than for a change in spending?...
Why is the multiplier for a change in taxes smaller than for a change in spending? a. A change in taxes has no effect on aggregate demand, only on aggregate supply. b. A change in taxes directly affects government spending as well, lowering the multiplier. c. A change in taxes affects spending directly, but at a slower rate than spending does. d. A change in taxes affects disposable income and then consumption rather than spending directly. e. All of the...
The ________ the marginal propensity to import, the ________ the expenditure multiplier. A. larger; smaller B....
The ________ the marginal propensity to import, the ________ the expenditure multiplier. A. larger; smaller B. smaller; smaller C. larger; more negative D. larger; larger E. None of the above is correct, because the expenditure multiplier is not related to the marginal propensity to import.
Two economists estimate the government expenditure multiplier and come up with different results. One estimates the...
Two economists estimate the government expenditure multiplier and come up with different results. One estimates the multiplier at 0.8, while the other comes up with an estimate of 1.25. Explain why these estimates are different in terms of the assumptions that each economist is making. A. Compared to the first economist, the second economist must be assuming either a smaller induced increase in consumption, a larger crowding out effect, or both. B. Compared to the first economist, the second economist...
If the consumption function is C = $600 +0.9Y), the MPS is the government spending multiplier is and the tax multiplier is O 0.9; 10;-) O 0.9;-9:10 O 0.1;-9:10 O 0.1:10:-9
5. Let C=120+0.6Yd, I=140, G=200, T=100. (a) What are government spending multiplier, tax multiplier, and balanced-budget multiplier? 0) What are be supue com (b) What are the output, consumption, saving, and budget deficit at the equilibrium? pusa aning and budget details equivat (c) What are the output, consumption, and saving if the government changes the budget deficit to zero by a change in G. G decreases 100 (d) What are the output, consumption, and saving if the government changes the...
refer to table 24.6. the value of the government spending
multiplier
QUESTI 17 Refer to the information provided in Table 24.6 below to answer the question(s) that follow. Output (Income 2,400 2.500 3,000 3,200 3,400 3,600 3,800 Table 24.6 All Figures in Billions of Dollars Consumption Planned Net Spending Investment Government Taxes (C-100+ 9Yd Savings Purchases Spending 100 2,170 2,530 2,710 2,890 3,070 3.250 8R888R 8888888 Refer to Table 24.6. The value of the government spending multiplier is 10. is...
Question 18 6 pts If the consumption function is C - $250 +0.75(Y), the MPS is__, the government spending multiplier is multiplier is and the tax O 0.25: -3,4 0.25:4:-3 O 0.75:-3;4 O 0.75; 4;-3
13. The reason for the multiplier effect is that a. one person's additional expenditure constitutes a new source of income for another person, and this additional income leads to still more spending, and so on. b. changes in government spending typically deepen recessions or exacerbate inflationary conditions in the economy. c. businesses make decisions about investment projects based on anticipated profits. d. additional spending lowers the real interest rate and leads to further borrowing and spending by businesses. 14. If...
Why is the multiplier for a change in taxes smaller than for a change in spending? a. A change in taxes has no effect on aggregate demand, only on aggregate supply. b. A change in taxes directly affects government spending as well, lowering the multiplier. c. A change in taxes affects spending directly, but at a slower rate than spending does. d. A change in taxes affects disposable income and then consumption rather than spending directly. e. All of the...
Two economists estimate the government expenditure multiplier and come up with different results. One estimates the multiplier at 0.8, while the other comes up with an estimate of 1.25. Explain why these estimates are different in terms of the assumptions that each economist is making. A. Compared to the first economist, the second economist must be assuming either a smaller induced increase in consumption, a larger crowding out effect, or both. B. Compared to the first economist, the second economist...
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