Assume that the MPC is 0.85 and investment spending rises by $100 million. How much consumption...
Assume that the MPC is 0.85 and investment spending rises by $100 million. How much consumption spending will this generate in the second round of spending?
|
|||
|
|||
|
|||
|
|||
|
Homework Answers
MPC = 0.85
Increase in investment = $100 million
In the first round,
Consumption increases by 0.85 x 100 = $85 million
In the second round,
Consumption increases by 0.85 x 85 = $72.25 million
Thus, correct answer: $72.25 million
Add Answer to:
Assume that the MPC is 0.85 and investment spending rises by
$100 million. How much consumption...
Assume that the MPC is 0.85 and investment spending rises by $100 million. How much consumption...
Assume that the MPC is 0.85 and investment spending rises by $100 million. How much consumption spending will this generate in the second round of spending? O a. $100 million O b. $85 million O c. $185 million O d. $118 million oo e. 515 million
If the MPC in an economy equals 0.8, and disposable income falls by $100, consumption spending...
If the MPC in an economy equals 0.8, and disposable income falls by $100, consumption spending will fall by _____. A. $8.00 B. $0.80 C. $80 D. $20 E. $500
Consumption spending is $5 million, planned investment spending is $8 million, unplanned investment spending is $2 mi...
Consumption spending is $5 million, planned investment spending is $8 million, unplanned investment spending is $2 million, government purchases are $10 million, and net export spending is $2 million. What is GDP? The answer is 27 million can someone show how they got it
The level of aggregate output demanded rises when the price level falls, because the resulting decrease in the interest rate will lead to a. higher investment spending and higher consumption spending. b. lower investment spending and higher co
1. The level of aggregate output demanded rises when the price level falls, because the resulting decrease in the interest rate will lead to a. higher investment spending and higher consumption spending.b. lower investment spending and higher consumption spending.c. higher investment spending and lower consumption spending.d. lower investment spending and lower consumption spending.
MPC Spending Multiplier Change in income 100 20 0.99 0.95 0.6 0.5 Change in government spending...
MPC Spending Multiplier Change in income 100 20 0.99 0.95 0.6 0.5 Change in government spending $15 $100 -$400 $450 $1,500 $2,000 -$1,000 $900 2.5 2.0 4. Assume that the equilibrium in the loanable funds market is at interest rate of 1.25% and quantity of funds at $20 billion. Suppose the current government deficit is zero so government is not borrowing any money. a) Suppose now government increases spending by $2 billion and finances it entirely by borrowing. This deficit...
2. If the MPC were 0.9 and government increased spending by $100 billion. (a) How much...
2. If the MPC were 0.9 and government increased spending by $100 billion. (a) How much spending would occur in the third cycle of the figure below? (b) How many spending rounds would occur before consumer spending increased by $300 billion? The third cycle there would be 81 billion of
Keynesian Consumption Function (billions of dollars per year) Real disposable income Consumption Saving MPC MPS $100...
Keynesian Consumption Function (billions of dollars per year) Real disposable income Consumption Saving MPC MPS $100 200 300 400 500 $150 200 250 300 350 a.) Calculate the saving schedule. b. Determine the marginal propensities to consume (MPC) and save (MPS). c. Determine the break-even income. d.) What is the relationship between the MPC and the MPS? 3. Explain why the MPC and the MPS must always add up to one. 4. How do households "dissave" 5. Explain how each...
2. If the MPC were o.9 and government increased spending by $100 billion. (a) How much...
2. If the MPC were o.9 and government increased spending by $100 billion. (a) How much spending would occur in the third cycle of the figure below? (b) How many spending rounds would occur before consumer spending increased by $300 billion? The third cvcle there would bdBI billion of
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)?
3. Suppose the government increases education spending by $30 billion. How much additional consumption will this...
3. Suppose the government increases education spending by $30 billion. How much additional consumption will this increase cause? Assume the MPC (marginal propensity to consume) to be 0.75.
Assume that the MPC is 0.85 and investment spending rises by $100 million. How much consumption spending will this generate in the second round of spending? O a. $100 million O b. $85 million O c. $185 million O d. $118 million oo e. 515 million
MPC Spending Multiplier Change in income 100 20 0.99 0.95 0.6 0.5 Change in government spending $15 $100 -$400 $450 $1,500 $2,000 -$1,000 $900 2.5 2.0 4. Assume that the equilibrium in the loanable funds market is at interest rate of 1.25% and quantity of funds at $20 billion. Suppose the current government deficit is zero so government is not borrowing any money. a) Suppose now government increases spending by $2 billion and finances it entirely by borrowing. This deficit...
2. If the MPC were 0.9 and government increased spending by $100 billion. (a) How much spending would occur in the third cycle of the figure below? (b) How many spending rounds would occur before consumer spending increased by $300 billion? The third cycle there would be 81 billion of
Keynesian Consumption Function (billions of dollars per year) Real disposable income Consumption Saving MPC MPS $100 200 300 400 500 $150 200 250 300 350 a.) Calculate the saving schedule. b. Determine the marginal propensities to consume (MPC) and save (MPS). c. Determine the break-even income. d.) What is the relationship between the MPC and the MPS? 3. Explain why the MPC and the MPS must always add up to one. 4. How do households "dissave" 5. Explain how each...
2. If the MPC were o.9 and government increased spending by $100 billion. (a) How much spending would occur in the third cycle of the figure below? (b) How many spending rounds would occur before consumer spending increased by $300 billion? The third cvcle there would bdBI billion of
3. Suppose the government increases education spending by $30 billion. How much additional consumption will this increase cause? Assume the MPC (marginal propensity to consume) to be 0.75.
Most questions answered within 3 hours.
-
At the beginning of the period, the Fabricating Department
budgeted direct labor of $136,500 and equipment...
asked 16 seconds from now -
PARTS A-D HAVE BEEN ANSWERED. WAS TOLD TO REPOST. ONLY ANSWER
PARTS E and F.
A...
asked 17 minutes ago -
2) You are given the task of finding a representation for a
circle in a drawing...
asked 1 hour ago -
STUDY QUESTION: Does use of diet drug fen-phen
(fenfluramine-phentermine) cause valvular heart disease?
HINT: Valvular heart...
asked 1 hour ago -
1. An object weighing 40 N rests on a surface. The coefficient
of friction is 0.35....
asked 2 hours ago -
Investor company owns 35% of investee company voting stock and
accounts for the investment under the...
asked 3 hours ago -
The number of major faults on a randomly chosen 1 km stretch of
highway has a...
asked 4 hours ago -
Consider the competitive environment of Starbuck's, Progressive
Insurance, a manufacturing firm with low turnover, or a...
asked 4 hours ago -
3. Gains from trade
Consider two neighbouring island countries called Euphoria and
Contente. They each have...
asked 6 hours ago -
A business executive has the option to invest money in two
plans: Plan A guarantees that...
asked 9 hours ago -
Hello, can someone please help me answer this question?
How much heat is absorbed by a...
asked 9 hours ago -
. A marketing researcher conducted a survey of 25 shoppers
randomly selected at the local mall...
asked 9 hours ago