Suppose that Y increases $1,000 after G increases $500. What is MPC?
Change in Y=K*Change in G
Change in Y=1000
Change in G=500
K=1000/500
K=2
K=1/1-MPC
2=1/1-MPC
MPC=.5
Suppose that Y increases $1,000 after G increases $500. What is MPC?
Suppose MPC=.8 and that G goes up by $500. What is the change in Y?
Suppose MPC=.75. What is the change in G if you want Y to increase by $2,000?
Suppose the MPC is .9 and planned investment increases by $100 billion. After the multiplier process has taken effect, the Aggregate Demand curve will have shifted to the right by $_______________ billion.
1) If MPC = 0.6 (and there are no income taxes) when G increases by 200, then the IS curve for any given interest rate shifts to the right by: A) 200. B) 300. C) 400. D) 500. 2)If MPC = 0.6 (and there are no income taxes but only lump-sum taxes) when T decreases by 200, then the IS curve for any given interest rate shifts to the right by: A) 100. B) 200. C) 300. D) 40
If MPC = 0.75 (and there are no income taxes) when G increases by 100, then the IS curve for any given interest rate shifts to the right by: A) 100. B) 200. C) 300. D) 400.
QUESTION 21 Suppose investment spending initially increases by $50 billion in an economy whose MPC is 2/3. By how much will this ultimately change real GDP? O A $75 billion OB. $50 billion OC $ 150 billion D. $ 200 billion QUESTION 22 Which of the following statements is FALSE? O A When income increases MPS is constant When income increases APS Increases C. When income increases MPC is increases D. When income increases APC decreases QUESTION 23 If the...
1. Suppose that the MPC=.75. If the government was to increase equilibrium output by $10,000, by how much should they increase government spending? 2. This question considers the link between the IS-LM model and the AD-AS model. Suppose the Fed increases the money supply. This causes the _________ curve to shift _______, which causes aggregate demand to shift ___________. Finally, equilibrium output _________ as a result. 3.Use the IS-LM diagram to answer the following: If the Fed increases the money...
The spending multiplier, m, is 1/(1 MPC). a) If the MPC is 0.9, what is the spending multiplier? b) Now suppose government spending increases by $90 million. By how much will GDP rise? $million
if the marginal propensity to consume (MPC) is equal to 0.7, government increases spending by $X, and the GDP increases by $1000. Calculate $X. A. $500 B. $100. C. There is not enough information to answer the question. D. $ 400. E. $300.
y C G I C+G+I C+G+I(2) 0 250 100 150 500 550 500 650 100 150 900 950 1000 1050 100 150 1300 1350 1500 1450 100 150 1700 1750 2000 1850 100 150 2100 2150 2500 2250 100 150 2500 2550 3000 2650 100 150 2900 2950 3500 3050 100 150 3300 3350 4000 3450 100 150 3700 3750 4500 3850 100 150 4100 4150 1. The consumption function is C=250+0.8y. How much are a (the intercept) and MPC...