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an increased saving will decrease the marginal propensity to consume and the multiplier with it, that will cause a decline in the effect of increased investment.
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According to the Bureau of Economic Analysis, during the recession of 2007 - 2009, household saving as a fraction of di...
help TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false....
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TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 11) As long as income is above planned aggregate expenditure, unplanned inventory reductions have occurred. 12) Actual investment equals planned investment plus unplanned changes in inventories. 13) Firms react to an unplanned inventory investment by increasing output 14) If the MPC is 0.8, then the multiplier is 0.2 15) If the MPS is 0.25, then the multiplier is 4. 16) When the economy is...
13. The reason for the multiplier effect is that a. one person's additional expenditure constitutes a...
13. The reason for the multiplier effect is that a. one person's additional expenditure constitutes a new source of income for another person, and this additional income leads to still more spending, and so on. b. changes in government spending typically deepen recessions or exacerbate inflationary conditions in the economy. c. businesses make decisions about investment projects based on anticipated profits. d. additional spending lowers the real interest rate and leads to further borrowing and spending by businesses. 14. If...
1. Complete the table below where the cells are blank. (10 pts) Output Sensor Saving Inxstant...
1. Complete the table below where the cells are blank. (10 pts) Output Sensor Saving Inxstant Export Import ort GDP=DI Net Agg Age Unnind Output Invent Emploxmnt 250 260 310 15 330310 2. What number is unplanned inventories at output of $270 million? Explain what the unplanned inventories number means at that output level? (2 pts) 3. At $330 million of output what must happen in this open economy to reach equilibrium? (2 pts) 4. Equilibrium is achieved at what...
EXERCISE 1:TRUE OR FALSE 1. If the dollar appreciates relative to foreign currencies, we would expect...
EXERCISE 1:TRUE OR FALSE 1. If the dollar appreciates relative to foreign currencies, we would expect a country's net exports to fall. If government decreases its purchases by $20 billion and the MPC is 0.8, equilibrium GDP will decrease by $100 billion. When a private closed economy is at equilibrium, then (GDP-C) is equal to planned investment. If planned investment is larger than saving, then real GDP will increase as the economy adjusts toward equilibrium. 5. Positive net exports increase...
1. In a closed economy to have sustainable output, Aggregate Expenditures are equal to
1. In a closed economy to have sustainable output, Aggregate Expenditures are equal toa. Consumptionb. Consumption + Investmentc. Consumption + Investment + Govemmentd. Consumption + Investment + Net Exports2. The calculation 1 /(1-MPC) equalsa. Marginal Propensity to Saveb. Multiplierc. Aggregate Expenditured. Average Consumption3. In a closed economy, when Aggregate Expenditures equal GDP.a. Consumption equals investmentb. Consumption equals aggregate expenditurec. Saving = Planned Investmentd. Disposable income equals consumption minus saving4. Net exports are calculated asa. Importsb. Imports - Exportsc. Exports -...
According to Keynesian theory, the most important determinant of saving and consumption is Select one: a....
According to Keynesian theory, the most important determinant of saving and consumption is Select one: a. the level of real income. b. the stock of liquid assets. c. the stock of durable goods in the consumer's possession. d. the level of consumer indebtedness. Question 5 Not yet answered Marked out of 1.00 Flag question Question text In the Keynesian model, planned investment is inversely related to Select one: a. the interest rate. b. the level of income. c. the wage...
MULT CHOICE OPTIONS 1. decrease, stay unchanged, increase 2. increase, Stan unchanged, decrease 3.saving equals investment,...
MULT CHOICE OPTIONS
1. decrease, stay unchanged, increase
2. increase, Stan unchanged, decrease
3.saving equals investment, output reaches a peak, planned
investment is zero
The small island nation of Kaboom is a simple economy with no government, no taxes, and no imports or exports. Kaboomers (citizens of Kaboom) are creatures of habit. They have a rule that everyone saves exactly 25 percent of income. Assume that planned investment is fixed and remains at 225 million Kaboomian dollars. Further assume that...
4. Based on our understanding of the model presented in Chapter 3, we know that an increase in cl (where C c0+ elYD...
4. Based on our understanding of the model presented in Chapter 3, we know that an increase in cl (where C c0+ elYD) will cause )a the ZZ line to become flatter. )cagiven change in autonomous consumption (c0) to have a larger effect on output ) b. the ZZ line to become steeper ) da given change in autonomous consumption (c0) to have a larger-effect on output Opater 5. Suppose the consumption equation is represented by the following: C-250 +...
The net export function illustrates that:A) net exports are a positive function of domestic income....
The net export function illustrates that:A) net exports are a positive function of domestic income.B) net exports are independent of domestic income.C) net exports are a negative function of domestic income.D) imports are independent of domestic income.E) exports are independent of foreign income. Suppose the marginal propensity to import for country A is 0.4. Calculate the change in total value of imports of the country if national income increases by $100,000.A) $16,000B) $20,000C) $60,000D) $40,000E) $25,000 An MPI of 0.4 indicates that...
3. The Consumer Price Index (CPI) represents the average price of goods that households consume. Many...
3. The Consumer Price Index (CPI) represents the average price of goods that households consume. Many thousands of goods are included in such an index. Here consumers are repre- sented as buying only food (pizza) and gas as their basket of goods. Below is a representation of the kind of data the Bureau of Economic Analysis (BEA) collects to construct a consumer price index. In the base year, 2008, both the prices of goods purchased and the quantity of goods...
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TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 11) As long as income is above planned aggregate expenditure, unplanned inventory reductions have occurred. 12) Actual investment equals planned investment plus unplanned changes in inventories. 13) Firms react to an unplanned inventory investment by increasing output 14) If the MPC is 0.8, then the multiplier is 0.2 15) If the MPS is 0.25, then the multiplier is 4. 16) When the economy is...
13. The reason for the multiplier effect is that a. one person's additional expenditure constitutes a new source of income for another person, and this additional income leads to still more spending, and so on. b. changes in government spending typically deepen recessions or exacerbate inflationary conditions in the economy. c. businesses make decisions about investment projects based on anticipated profits. d. additional spending lowers the real interest rate and leads to further borrowing and spending by businesses. 14. If...
1. Complete the table below where the cells are blank. (10 pts) Output Sensor Saving Inxstant Export Import ort GDP=DI Net Agg Age Unnind Output Invent Emploxmnt 250 260 310 15 330310 2. What number is unplanned inventories at output of $270 million? Explain what the unplanned inventories number means at that output level? (2 pts) 3. At $330 million of output what must happen in this open economy to reach equilibrium? (2 pts) 4. Equilibrium is achieved at what...
EXERCISE 1:TRUE OR FALSE 1. If the dollar appreciates relative to foreign currencies, we would expect a country's net exports to fall. If government decreases its purchases by $20 billion and the MPC is 0.8, equilibrium GDP will decrease by $100 billion. When a private closed economy is at equilibrium, then (GDP-C) is equal to planned investment. If planned investment is larger than saving, then real GDP will increase as the economy adjusts toward equilibrium. 5. Positive net exports increase...
1. In a closed economy to have sustainable output, Aggregate Expenditures are equal toa. Consumptionb. Consumption + Investmentc. Consumption + Investment + Govemmentd. Consumption + Investment + Net Exports2. The calculation 1 /(1-MPC) equalsa. Marginal Propensity to Saveb. Multiplierc. Aggregate Expenditured. Average Consumption3. In a closed economy, when Aggregate Expenditures equal GDP.a. Consumption equals investmentb. Consumption equals aggregate expenditurec. Saving = Planned Investmentd. Disposable income equals consumption minus saving4. Net exports are calculated asa. Importsb. Imports - Exportsc. Exports -...
MULT CHOICE OPTIONS
1. decrease, stay unchanged, increase
2. increase, Stan unchanged, decrease
3.saving equals investment, output reaches a peak, planned
investment is zero
The small island nation of Kaboom is a simple economy with no government, no taxes, and no imports or exports. Kaboomers (citizens of Kaboom) are creatures of habit. They have a rule that everyone saves exactly 25 percent of income. Assume that planned investment is fixed and remains at 225 million Kaboomian dollars. Further assume that...
4. Based on our understanding of the model presented in Chapter 3, we know that an increase in cl (where C c0+ elYD) will cause )a the ZZ line to become flatter. )cagiven change in autonomous consumption (c0) to have a larger effect on output ) b. the ZZ line to become steeper ) da given change in autonomous consumption (c0) to have a larger-effect on output Opater 5. Suppose the consumption equation is represented by the following: C-250 +...
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