Homework Answers
Crowding out is a phenomenon that arises when there is is government deficit spending increase and this will lead to have less business and private investmentin the economy
There is no investment accelerator or crowding out so the effect would be smaller if there were and investment accelerator
The correct answer here is option C
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If the marginal propensity to consume is 0.75, and there is no investment accelerator or crowding...
Suppose the MPC is 0.60. Assume there are no crowding out or investment accelerator effects. If...
Suppose the MPC is 0.60. Assume there are no crowding out or investment accelerator effects. If the government increases expenditures by $200 billion, then by how much does aggregate demand shift to the right? If the government decreases taxes by $200 billion, then by how much does aggregate demand shift to the right? A. $500 billion and $300 billion B. $500 billion and $500 billion C. $300 billion and $300 billion D. $300 billion and $180 billion
1.) If the marginal propensity to consume is 0.75 and investment spending increases by $200 billion,...
1.) If the marginal propensity to consume is 0.75 and investment spending increases by $200 billion, equilibrium GDP will increase by____. $350 billion $150 billion $200 billion $266.7 billion $800 billion 2.) AE = 3000 + 0.75*RGDP. Given this equation for AE, find equilibrium GDP $1,000 $750 $12,000 $2,250 3.) The four components of aggregate planned expenditure are the real interest rate, disposable income, wealth, and expected future income the real interest rate, consumption expenditure, investment, and government expenditures consumption...
An increase in the marginal propensity to consume Select one: a increases the multiplier, so that...
An increase in the marginal propensity to consume Select one: a increases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. b. decreases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. C. increases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand. d. decreases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand. If many...
Currently, a government's budget is balanced. The marginal propensity to consume is 0.80. The government has...
Currently, a government's budget is balanced. The marginal propensity to consume is 0.80. The government has determined that each additional $10 Billion in new government debt it issues to finance a budget deficit pushes up the market interest rate by 0.1 percentage point. It has also determined that every 0.1 percentage point change in the market interest rate generates a change in investment expenditures equal to $2 Billion. Finally, the government knows that to close a recessionary gap and take...
Suppose economists observe that an increase in government spending of $5 billion raises the real aggregate...
Suppose economists observe that an increase in government spending of $5 billion raises the real aggregate output level by $20 billion. (a) In the absence of the crowding out effect, what would the numerical value of marginal 1. propensity to consume (MPC)? (b) Now suppose the crowding-out effect also comes to play.Should the new numerical value of marginal propensity to consume (MPC) be larger or smaller than that of your answer in part (a)? Explain. (Hint: the multiplier effect and...
Use the aggregate expenditures model and assume the marginal propensity to consume is 0.90. An increase...
Use the aggregate expenditures model and assume the marginal propensity to consume is 0.90. An increase in government spending of $1 billion would result in an increase in GDP of?
3. If the marginal propensity to consume is .9, and investment expenditures increase by $100 billion, what is the proje...
3. If the marginal propensity to consume is .9, and investment expenditures increase by $100 billion, what is the projected increase in GDP?
Is the right answer b? thank you Assume the multiplier is 5 and that the crowding-out...
Is the right answer b? thank you
Assume the multiplier is 5 and that the crowding-out effect is $30 billion. An increase in government purchases of $20 billion will shift the aggregate-demand curve to the A. right by $130 billion. B. right by $70 billion. C. right by $50 billion. CD.right by $10 billion.
Here are some facts about the economy of Inferior. Marginal propensity to consume 3/5 marginal propensity...
Here are some facts about the economy of Inferior. Marginal propensity to consume 3/5 marginal propensity to import 0 autonomous consumption 4 exports 0 private investment 20 income tax rate 0 government expenditures 0 Income consumption investment government aggregate expenditures expenditures 0 10 20 30 40 50 60 70 80 90 What is equilibrium GDP?
If autonomous investment increases by $100 million and the marginal propensity to consume (MPC) is 0.75, then
If autonomous investment increases by $100 million and the marginal propensity to consume (MPC) is 0.75, then A. real Gross Domestic Product (GDP) will fall by $200 billion. B. real Gross Domestic Product (GDP) will rise by $100 billion. C. real Gross Domestic Product (GDP) will rise by $200 billion. D. real Gross Domestic Product (GDP) will rise by $400 billion.
An increase in the marginal propensity to consume Select one: a increases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. b. decreases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. C. increases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand. d. decreases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand. If many...
Suppose economists observe that an increase in government spending of $5 billion raises the real aggregate output level by $20 billion. (a) In the absence of the crowding out effect, what would the numerical value of marginal 1. propensity to consume (MPC)? (b) Now suppose the crowding-out effect also comes to play.Should the new numerical value of marginal propensity to consume (MPC) be larger or smaller than that of your answer in part (a)? Explain. (Hint: the multiplier effect and...
3. If the marginal propensity to consume is .9, and investment expenditures increase by $100 billion, what is the projected increase in GDP?
Is the right answer b? thank you
Assume the multiplier is 5 and that the crowding-out effect is $30 billion. An increase in government purchases of $20 billion will shift the aggregate-demand curve to the A. right by $130 billion. B. right by $70 billion. C. right by $50 billion. CD.right by $10 billion.
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