Homework Answers
Multiplier= Change in real GDP/ Initial change in expenditure.
Hence option c is correct.
It always reflects change in real GDP.
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< Question 4 of 15 > The multiplier (expenditure multiplier) is the ratio between which two...
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...
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 =...
Aggregate expenditure is the total amount of spending in the economy that determines the level of...
Aggregate expenditure is the total amount of spending in the economy that determines the level of the GDP. Components of aggregate expenditure are autonomous expenditure, planned private investments, government expenditure, and net exports. When autonomous expenditure increases or decreases, it has a multiplied effect on the GDP. Referring to the 10-year historical period that you chose for your final project, discuss an example of a change in autonomous spending. Research a government policy implemented during that time and discuss the...
I CHOSE 1950-1960. Aggregate expenditure is the total amount of spending in the economy that determines...
I CHOSE 1950-1960. Aggregate expenditure is the total amount of spending in the economy that determines the level of the GDP. Components of aggregate expenditure are autonomous expenditure, planned private investments, government expenditure, and net exports. When autonomous expenditure increases or decreases, it has a multiplied effect on the GDP. Referring to the 10-year historical period that you chose for your final project, discuss an example of a change in autonomous spending. Research a government policy implemented during that time...
hestion Completion Status: QUESTION Consider a private, closed economy where aggregate consumption C depends on aggregate...
hestion Completion Status: QUESTION Consider a private, closed economy where aggregate consumption C depends on aggregate income Y according to the equation C. 15 0.5 Y. where planned investment is IP - 15. Using the above information, complete the following table: Y c R AER_ where AEP stands for aggregate expenditure planned. 1) Suppose that the GDP initially is Y 50. Obtain the corresponding levels of savings S and unplanned investment Is Y = 40 an income. expenditure equilibrium? If...
QUESTION TWO An economy is represented by the following set of equations: Y = C +...
QUESTION TWO An economy is
represented by the following set of equations: Y = C + I C = 80m +
1.6Y where Y represents aggregate expenditure C represents
consumption expenditure by households I represents investment
expenditure by firms M is millions of Ghana cedis (a) (i) Explain
why the model is not an open economy? (2 marks) (ii) Explain
investment expenditure (I) as used in the model. (3 marks) (b)
Using the consumption function, estimate the autonomous
consumption; marginal...
UMihal GDP in 2018; c) the rates of llGDP between the two years and discuss the...
UMihal GDP in 2018; c) the rates of llGDP between the two years and discuss the r 2. Given the following data re presenting the goods market of an open economy: Marginal Propensity to consume Direct Tax rate Investment Gov. spendin Autonomous consumption Exports Marginal propensity to import Autonomous Imports Transfers Autonomous Taxation 0.55 0.1 4000 9500 340 3000 0.15 100 90 20 Using the Keynesian cross-model, compute: a) The equilibrium level of the aggregate output b) c) d) The...
Question 5 (1 point) v Saved Which of the following would make the spending multiplier larger?...
Question 5 (1 point) v Saved Which of the following would make the spending multiplier larger? O 1) a small marginal propensity to consume O2) a real depreciation 3) a small marginal propensity to import O 4) a real appreciation 0 5) a large initial trade deficit
Problem 4 Consider the following economy: Consumption Expenditure 446,832 million Planned Investment Expenditure 346,877 million Government...
Problem 4
Consider the following economy:
Consumption Expenditure
446,832 million
Planned Investment Expenditure
346,877 million
Government Expenditure
446,832 million
Exports
402,443 million
Imports
388,374 million
Marginal Propensity to Save
0.3
Marginal Tax Rate
0.32
Autonomous Taxes
301,240 million
Marginal Propensity to Import (nx)
0.04
(a) Calculate the equilibrium level of
income. (0.5 mark)
(b) Calculate autonomous consumption. (0.5
mark)
(c) Calculate autonomous net exports. (0.5
mark)
(d) Calculate autonomous planned
expenditures. (0.5 mark)
(e) Calculate the marginal leakage rate. (0.5
mark)
(f) Assume that the...
nuuupuen. Table 1 AY a. Suppose the marginal propensity to spend out of GDP, z, is...
nuuupuen. Table 1 AY a. Suppose the marginal propensity to spend out of GDP, z, is 0.5. If autonomous spending increases by $2.000, fillin Table 1 to the right (Round Round ΔΑΕ your responses to the nearest dollar) b. The sum of the values in the third column should be AY-$2,000+ (0.5) xS2.000+ (0.5)2 $2.000 The total change in GDP is thus equal to Second Third Fourth Table 2 Round ADeposits AReserves ALoans c. Now consider the process of deposit...
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...
hestion Completion Status: QUESTION Consider a private, closed economy where aggregate consumption C depends on aggregate income Y according to the equation C. 15 0.5 Y. where planned investment is IP - 15. Using the above information, complete the following table: Y c R AER_ where AEP stands for aggregate expenditure planned. 1) Suppose that the GDP initially is Y 50. Obtain the corresponding levels of savings S and unplanned investment Is Y = 40 an income. expenditure equilibrium? If...
QUESTION TWO An economy is
represented by the following set of equations: Y = C + I C = 80m +
1.6Y where Y represents aggregate expenditure C represents
consumption expenditure by households I represents investment
expenditure by firms M is millions of Ghana cedis (a) (i) Explain
why the model is not an open economy? (2 marks) (ii) Explain
investment expenditure (I) as used in the model. (3 marks) (b)
Using the consumption function, estimate the autonomous
consumption; marginal...
UMihal GDP in 2018; c) the rates of llGDP between the two years and discuss the r 2. Given the following data re presenting the goods market of an open economy: Marginal Propensity to consume Direct Tax rate Investment Gov. spendin Autonomous consumption Exports Marginal propensity to import Autonomous Imports Transfers Autonomous Taxation 0.55 0.1 4000 9500 340 3000 0.15 100 90 20 Using the Keynesian cross-model, compute: a) The equilibrium level of the aggregate output b) c) d) The...
Question 5 (1 point) v Saved Which of the following would make the spending multiplier larger? O 1) a small marginal propensity to consume O2) a real depreciation 3) a small marginal propensity to import O 4) a real appreciation 0 5) a large initial trade deficit
Problem 4
Consider the following economy:
Consumption Expenditure
446,832 million
Planned Investment Expenditure
346,877 million
Government Expenditure
446,832 million
Exports
402,443 million
Imports
388,374 million
Marginal Propensity to Save
0.3
Marginal Tax Rate
0.32
Autonomous Taxes
301,240 million
Marginal Propensity to Import (nx)
0.04
(a) Calculate the equilibrium level of
income. (0.5 mark)
(b) Calculate autonomous consumption. (0.5
mark)
(c) Calculate autonomous net exports. (0.5
mark)
(d) Calculate autonomous planned
expenditures. (0.5 mark)
(e) Calculate the marginal leakage rate. (0.5
mark)
(f) Assume that the...
nuuupuen. Table 1 AY a. Suppose the marginal propensity to spend out of GDP, z, is 0.5. If autonomous spending increases by $2.000, fillin Table 1 to the right (Round Round ΔΑΕ your responses to the nearest dollar) b. The sum of the values in the third column should be AY-$2,000+ (0.5) xS2.000+ (0.5)2 $2.000 The total change in GDP is thus equal to Second Third Fourth Table 2 Round ADeposits AReserves ALoans c. Now consider the process of deposit...
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