Q. How do the marginal propensity to consume, the marginal propensity to import and the income tax ratio influence the m...
Q. How do the marginal propensity to consume, the marginal propensity to import and the income tax ratio influence the multiplier? How do fluctuation in autonomous expenditure influence real GDP?
Homework Answers
Multiplier is computed as 1 / (1 - MPC(1 - t) + MPM)
where MPC is marginal propensity to consume,
MPM is the marginal propensity to import and
t is the income tax ratio
An increase in MPC raises the value of multiplier
An increase in t reduces the value of multiplier
An increase in MPM reduces the value of multiplier
Fluctuation in autonomous expenditure have a larger influence on the real GDP because they work through the multiplier effect. Given a change in autonomous expenditure, real GDP changes by the multiplier times which implies fluctuations in autonomous expenditure magnify the changes in real GDP
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Q. How do the marginal propensity to consume, the marginal propensity to import and the income tax ratio influence the m...
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...
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Suppose the marginal propensity to consume is 0.7 and the government votes to increase taxes by...
Suppose the marginal propensity to consume is 0.7 and the government votes to increase taxes by $1.5 billion. Round to the nearest tenth if necessary. Assume the tax rate and the marginal propensity to import are 0. Calculate the tax multiplier tax multiplier:-2.3 Calculate the resulting change in the equilibrium quantity of real GDP demanded -3.5 billion
< Question 4 of 15 > The multiplier (expenditure multiplier) is the ratio between which two...
< Question 4 of 15 > The multiplier (expenditure multiplier) is the ratio between which two measures?! marginal propensity to consume AND the size of an autonomous change in nominal GDP O marginal propensity to save AND marginal propensity to consume total change in real GDP due to an autonomous change in aggregate spending AND the size of the autonomous change in aggregate spending O total change in nominal GDP caused by an autonomous change in aggregate spending AND the...
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?
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The following table shows alternative hypothetical economies and the relevant values for the marginal propensity to...
The following table shows alternative hypothetical economies and the relevant values for the marginal propensity to consume out of disposable income (MPC), the net tax rate (t), and the marginal propensity to import (m). a. Recall that z, the marginal propensity to spend out of national income, is given by the simple expression Z-MPC(1-1)-m. By using this expression, compute z and the simple multiplier for each of the economies and fill in the table. (Round your response to two decimal...
7. If marginal propensity to consume (mpc) is 0.8, tax rate (t) is 0.2, and marginal...
7. If marginal propensity to consume (mpc) is 0.8, tax rate (t) is 0.2, and marginal propensity to import (mpm )is 0.14, then the multiplier is: a) 4 b) 2 c) 3 d) 2.33 Your answer: Explanation: le 8. Given the value of the multiplier you got from question 7, if the government wanted to raise the equilibrium GDP by 100, it could: a) Raise only G by $100 b) Raise both G and T by 50 c) Raise only...
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 How much is consumption when income equals 10
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...
Suppose the marginal propensity to consume is 0.7 and the government votes to increase taxes by $1.5 billion. Round to the nearest tenth if necessary. Assume the tax rate and the marginal propensity to import are 0. Calculate the tax multiplier tax multiplier:-2.3 Calculate the resulting change in the equilibrium quantity of real GDP demanded -3.5 billion
< Question 4 of 15 > The multiplier (expenditure multiplier) is the ratio between which two measures?! marginal propensity to consume AND the size of an autonomous change in nominal GDP O marginal propensity to save AND marginal propensity to consume total change in real GDP due to an autonomous change in aggregate spending AND the size of the autonomous change in aggregate spending O total change in nominal GDP caused by an autonomous change in aggregate spending AND the...
The following table shows alternative hypothetical economies and the relevant values for the marginal propensity to consume out of disposable income (MPC), the net tax rate (t), and the marginal propensity to import (m). a. Recall that z, the marginal propensity to spend out of national income, is given by the simple expression Z-MPC(1-1)-m. By using this expression, compute z and the simple multiplier for each of the economies and fill in the table. (Round your response to two decimal...
7. If marginal propensity to consume (mpc) is 0.8, tax rate (t) is 0.2, and marginal propensity to import (mpm )is 0.14, then the multiplier is: a) 4 b) 2 c) 3 d) 2.33 Your answer: Explanation: le 8. Given the value of the multiplier you got from question 7, if the government wanted to raise the equilibrium GDP by 100, it could: a) Raise only G by $100 b) Raise both G and T by 50 c) Raise only...
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