15. According to the Keynesian-cross analysis, if MPC stands for marginal propensity to consume, then a...
15. According to the Keynesian-cross analysis, if MPC stands for marginal propensity to consume, then a rise in taxes of ΔT will: A) decrease equilibrium income by ΔT. B) decrease equilibrium income by ΔT/(1 – MPC). C) decrease equilibrium income by (ΔT)(MPC)/(1 – MPC). D) not affect equilibrium income at all.
16. Assume that a country’s MPS is equal to 0.4 and government expenditure is lowered by $20 billion, what is the effect on the country’s Y? A) It will decrease by $30 billion B) It will increase by $50 billion C) It will increase by $ 33.3 billion D) It will decrease by $13.3 billion E) none of the above
Homework Answers
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15. According to the Keynesian-cross analysis, if MPC stands for
marginal propensity to consume, then a...
20. According to the Keynesian-cross analysis, if the marginal propensity to consume is 0.6, and government...
20. According to the Keynesian-cross analysis, if the marginal propensity to consume is 0.6, and government expenditures and lump-sum taxes are both increased by 100, equilibrium income will rise by A) 0 100 150 200 BOB
ue or false. MPC+ MPS 1 o True O False Correct. Marginal propensity to consume plus...
ue or false. MPC+ MPS 1 o True O False Correct. Marginal propensity to consume plus marginal propensity to save equals 1. of aggregate expenditure is 5 MPcio 8 when the MPC is.8 and there is an increase in investment spending of $100,000. x Incorrect. First determine the expenditure multiplier, then multiply that by $100,000 to obtain the correct answer True or false. If people save more of their income, the expenditure multiplier will not decrease and aggregate expenditures will...
Consider two closed economies that are identical except for their marginal propensity to consume (MPC)
6. The government-purchases multiplier and the MPC Consider two closed economies that are identical except for their marginal propensity to consume (MPC). Each economy is currently in equilibrium with income and planned expenditure equal to $100 billion, as shown by the black Xs on the following two graphs. Neither economy has taxes that change with income. The grey lines show the 45-degree line on each graph. The first economy's MPC is 0.5. Therefore, its initial planned-expenditure function has a slope of 0.5...
Suppose that the marginal propensity to consume if.6 and that there is an increase in government...
Suppose that the marginal propensity to consume if.6 and that there is an increase in government expenditure of 5. a) According to the Keynesian cross model, what is the change in output that results from this policy change? b) Describe the graphical impact that this change will have on the Keynesian cross model c) Why is the change in output different from the change in government expenditure? Explain how this process works intuitively.
Assume the government cuts taxes by $200 billion. If the MPC is 0.8, what is the maximum potential impact on real GDP according to the simple Keynesian model?
Assume the government cuts taxes by $200 billion. If the MPC is 0.8, what is the maximum potential impact on real GDP according to the simple Keynesian model? Real GDP increases by $1,000 billion Real GDP Increases by $800 billion Real GDP decreases by 51.000 billion Real GDP decreases by 5000 buttonIn Keynesian theory, if the marginal propensity to consume is 0.90 and government spending is increased by $50 billion, then real income (GDP) will maximum of billion by a decrease: $500 decrease $50 Increase: $500 Increase: $50
Marginal Propensity to Marginal Propensity to Consume (MPC) Save (MPS) Multiplier (m) 0.92 10 0.85 0.20 23). a). In th...
Marginal Propensity to Marginal Propensity to Consume (MPC) Save (MPS) Multiplier (m) 0.92 10 0.85 0.20 23). a). In the above table, what is the value of the marginal propensity to consume MPC) that correctly fills in blank (G) and the value of the income multiplier that correctly fills in blank (H)? Page 9 b)When the MPC increases, the income/spending multiplier (increases or decreas es). If MPC decreases? 17)Draw an AD and SRAS graph and label the axis, lines and...
please answer 7,8,9,10. thank you so much!!:)) SECTION In the simple Keynesian model with an MPC...
please answer 7,8,9,10. thank you so much!!:))
SECTION In the simple Keynesian model with an MPC equal Keynesian model with an MPC equal to 0.80, a S50 billion increase in investment spending leads to a maximum: $50 billion increase in equilibrium income. b. 580 billion increase in equilibrium income $250 billion increase in equilibrium income. d. $400 billion increase in equilibrium income S500 billion increase in equilibrium income. when $2.000 increase in income causes a $1,800 increase in consumption spending...
If marginal propensity to consume falls. How does this affect the Keynesian cross model? Then how...
If marginal propensity to consume falls. How does this affect the Keynesian cross model? Then how does it affect the IS Curve?
please show solutions also. Thanks Question 4 In a simple Keynesian model, assume that the marginal...
please show solutions also. Thanks
Question 4 In a simple Keynesian model, assume that the marginal propensity to consume (MPC) is 0.5. a) Find the government purchases multiplier b) Find the tax multiplier c) If the government wants to increase equilibrium real GDP by $ 500 billion, how much should the government increase spending? d) For the same purpose, how much should the government decrease taxes? According to Ricardian equivalence, do you think the government estimate is correct (should the...
If the marginal propensity to consume (MPC) increases... A. The MPS increases B. The multiplier decreases...
If the marginal propensity to consume (MPC) increases... A. The MPS increases B. The multiplier decreases C. MPC +MPS is less than 1 D. THe multiplier increases
20. According to the Keynesian-cross analysis, if the marginal propensity to consume is 0.6, and government expenditures and lump-sum taxes are both increased by 100, equilibrium income will rise by A) 0 100 150 200 BOB
ue or false. MPC+ MPS 1 o True O False Correct. Marginal propensity to consume plus marginal propensity to save equals 1. of aggregate expenditure is 5 MPcio 8 when the MPC is.8 and there is an increase in investment spending of $100,000. x Incorrect. First determine the expenditure multiplier, then multiply that by $100,000 to obtain the correct answer True or false. If people save more of their income, the expenditure multiplier will not decrease and aggregate expenditures will...
Suppose that the marginal propensity to consume if.6 and that there is an increase in government expenditure of 5. a) According to the Keynesian cross model, what is the change in output that results from this policy change? b) Describe the graphical impact that this change will have on the Keynesian cross model c) Why is the change in output different from the change in government expenditure? Explain how this process works intuitively.
Marginal Propensity to Marginal Propensity to Consume (MPC) Save (MPS) Multiplier (m) 0.92 10 0.85 0.20 23). a). In the above table, what is the value of the marginal propensity to consume MPC) that correctly fills in blank (G) and the value of the income multiplier that correctly fills in blank (H)? Page 9 b)When the MPC increases, the income/spending multiplier (increases or decreas es). If MPC decreases? 17)Draw an AD and SRAS graph and label the axis, lines and...
please answer 7,8,9,10. thank you so much!!:))
SECTION In the simple Keynesian model with an MPC equal Keynesian model with an MPC equal to 0.80, a S50 billion increase in investment spending leads to a maximum: $50 billion increase in equilibrium income. b. 580 billion increase in equilibrium income $250 billion increase in equilibrium income. d. $400 billion increase in equilibrium income S500 billion increase in equilibrium income. when $2.000 increase in income causes a $1,800 increase in consumption spending...
please show solutions also. Thanks
Question 4 In a simple Keynesian model, assume that the marginal propensity to consume (MPC) is 0.5. a) Find the government purchases multiplier b) Find the tax multiplier c) If the government wants to increase equilibrium real GDP by $ 500 billion, how much should the government increase spending? d) For the same purpose, how much should the government decrease taxes? According to Ricardian equivalence, do you think the government estimate is correct (should the...
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