Homework Answers
20. Equilibrium level of income= $400
Full employment income = $600
So, there is a deflationary gap of $(600-400)= $200. Hence,option(B) is correct.
1. Inflation rate for this economy in year 4 = [(135-120)/120]100 = 12.5% . Hence,option(A) is correct.
11. Government increases spending on infrastructure during a recession is an example of structural fiscal policy. Hence,option(B) is correct.
12. The paradox of thrift occurs when an increase in planned saving leads to a fall in equilibrium income. Hence,option(C) is correct.
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just answers 19 An increase il SI00. Which of the foll the MPC is 0.5 and...
just answers not explanations -the following information to answer Questions 19 and 20. An increase in...
just answers
not explanations
-the following information to answer Questions 19 and 20. An increase in consumption of S ince national equilibrium income by $25,000. Which of the following statements is correct A The MPC is 0.2 and the MPS is 03 B The MPC is 03 and the MPS is 07 C The MPC is 08 and the MPS is 02 The MPC is 0.5 and the MPS is 05 Assuming the new equilibrium income level is $100.000 and...
Investment Problem: 1. Assume the MPC is 3/4, if investment spending increase by $50 billion, the...
Investment Problem: 1. Assume the MPC is 3/4, if investment spending increase by $50 billion, the level of GDP will: 2. Assume the MPC is 2/3, if investment spending decreases by $30 billion, the level of GDP will: Export Problem: 3. If the multiplier in an economy is 4, a $50 billion increase in exports will: 4. If the multiplier in an economy is 3,a $30 billion decrease in exports will: Balanced Budget Problem: 5. If the MPC is .75...
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...
7 . Study Questions and Problems #5 Suppose the value of the MPC in an economy...
7 . Study Questions and Problems #5 Suppose the value of the MPC in an economy is 0.5 The value of the MPS in this economy is and the value of the spending multiplier in this economy is Now, suppose the value of the MPC in an economy is 0.8 The value of the MPS in this economy is , and the value of the spending multiplier in this economy is If the value of the MPC increases, the spending...
QUESTION 21 Suppose investment spending initially increases by $50 billion in an economy whose MPC is...
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...
According to the Bureau of Economic Analysis, during the recession of 2007 - 2009, household saving as a fraction of di...
According to the Bureau of Economic Analysis, during the recession of 2007 - 2009, household saving as a fraction of disposable personal income increased from a low of just over 1 percent in the first quarter of 2008 to 5 percent in the second quarter of 2009 All else equal, a higher saving rate would A. decrease MPC, increase MPS, and decrease the multiplier so that changes in planned investment will have a smaller impact on equilibrium output B. increase...
1. Suppose you are given the following information about Japan's economy: C = 150 + 0.8(Y-T)...
1. Suppose you are given the following information about Japan's economy: C = 150 + 0.8(Y-T) T = 0 Iplanned = 300 NX = 50 G = 200 a) Set up the aggregate planned expenditure function for Japan. (Write down the equation). b) Graph the aggregate expenditure function, using the diagram below. Be sure to label you graph. Carefully indicate the intercept. What is the slope of the line? c) Calculate equilibrium Real GDP (Y). d) Indicate the equilibrium on...
i need answers as soon as possible QUESTION 12 In the aggregate expenditure model if the...
i need answers as soon as possible
QUESTION 12 In the aggregate expenditure model if the government of Pasedonia decides to increase government spending by $ 100 billion and to finance this increase in government spending the government of Pasedonia increases taxes by $ 100 billion what effect will this have on the economy? (assume MPC 0.75) O A GDP stays the same B. GDP increases by $ 100 billion OC. GDP will increase by $ 400 billion OD. GDP...
1. Suppose in a simple closed economy with MPC = 0.75, the planned investment spending nas...
1. Suppose in a simple closed economy with MPC = 0.75, the planned investment spending nas suddenly fallen, reducing AD and output to a level that below the natural level of output by 100 Million. Assume that the real interest rate is constant so that there is no crowding out of (gross) investment. (a) If the government decided to try to get the output back to the natural level of output using only a change in government spending (AG), by...
help with those problema please 19 trhough 23 please 19. a. Complete the table below. All...
help with those problema please 19 trhough 23
please
19. a. Complete the table below. All figures are dollar amounts. Assume planned investment - $25 and note that once planned investment is determined, it stays constant (in our model) regardless of the level of GDP. Remember that U.LI. unplanned inventory investment (which is Y - pl AE). Y=GDP pl AE U.I.I pl I 1310 1301 -16 25 1326 1320 1307 25 1330 17 25 1340 1319 21 25 1350 1325...
just answers
not explanations
-the following information to answer Questions 19 and 20. An increase in consumption of S ince national equilibrium income by $25,000. Which of the following statements is correct A The MPC is 0.2 and the MPS is 03 B The MPC is 03 and the MPS is 07 C The MPC is 08 and the MPS is 02 The MPC is 0.5 and the MPS is 05 Assuming the new equilibrium income level is $100.000 and...
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...
7 . Study Questions and Problems #5 Suppose the value of the MPC in an economy is 0.5 The value of the MPS in this economy is and the value of the spending multiplier in this economy is Now, suppose the value of the MPC in an economy is 0.8 The value of the MPS in this economy is , and the value of the spending multiplier in this economy is If the value of the MPC increases, the spending...
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...
According to the Bureau of Economic Analysis, during the recession of 2007 - 2009, household saving as a fraction of disposable personal income increased from a low of just over 1 percent in the first quarter of 2008 to 5 percent in the second quarter of 2009 All else equal, a higher saving rate would A. decrease MPC, increase MPS, and decrease the multiplier so that changes in planned investment will have a smaller impact on equilibrium output B. increase...
1. Suppose you are given the following information about Japan's economy: C = 150 + 0.8(Y-T) T = 0 Iplanned = 300 NX = 50 G = 200 a) Set up the aggregate planned expenditure function for Japan. (Write down the equation). b) Graph the aggregate expenditure function, using the diagram below. Be sure to label you graph. Carefully indicate the intercept. What is the slope of the line? c) Calculate equilibrium Real GDP (Y). d) Indicate the equilibrium on...
i need answers as soon as possible
QUESTION 12 In the aggregate expenditure model if the government of Pasedonia decides to increase government spending by $ 100 billion and to finance this increase in government spending the government of Pasedonia increases taxes by $ 100 billion what effect will this have on the economy? (assume MPC 0.75) O A GDP stays the same B. GDP increases by $ 100 billion OC. GDP will increase by $ 400 billion OD. GDP...
1. Suppose in a simple closed economy with MPC = 0.75, the planned investment spending nas suddenly fallen, reducing AD and output to a level that below the natural level of output by 100 Million. Assume that the real interest rate is constant so that there is no crowding out of (gross) investment. (a) If the government decided to try to get the output back to the natural level of output using only a change in government spending (AG), by...
help with those problema please 19 trhough 23
please
19. a. Complete the table below. All figures are dollar amounts. Assume planned investment - $25 and note that once planned investment is determined, it stays constant (in our model) regardless of the level of GDP. Remember that U.LI. unplanned inventory investment (which is Y - pl AE). Y=GDP pl AE U.I.I pl I 1310 1301 -16 25 1326 1320 1307 25 1330 17 25 1340 1319 21 25 1350 1325...
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