2. In a closed economy with no government, a $1 billion increase in initial spending leads to a $5 billion increase in total income or output. a. What is the multiplier? b. What is the value of marginal propensity to save? c. What is the value marginal propensity to consume?

2. In a closed economy with no government, a $1 billion increase in initial spending leads to a $5 billion increase in total income or output. a. What is the multiplier? b. What is the value of marginal propensity to save? c. What is the value marginal propensity to consume?

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Description: please help me analyze and answer the followingwith formula and explanation please so that i canlearn. thank you 2. In a closed economy with no government, a $1 billionincrease in initial spending leads to a $5 billion increase intotal income or outp

Macroeconomics: Principles and Policy (MindTap Course List)

13th Edition

ISBN:9781305280601

Author:William J. Baumol, Alan S. Blinder

Publisher:William J. Baumol, Alan S. Blinder

Chapter8: Aggregate Demand And The Powerful Consumer

Section: Chapter Questions

Problem 8DQ

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2. In a closed economy with no government, a $1 billion increase in initial spending leads to a $5 billion increase in total income or output. a. What is the multiplier? b.What is the value of marginal propensity to save? c.What is the value marginal propensity to consume?
4. A country’s consumer spending is defined by the following equation:Consumer spending = 365 + 0.75 (Disposable Income)a. Draw a diagram to represent this equation. b. Assuming no government, what will the Marginal Propensity to Save (MPS) in this country.c. What will be Consumer spending if disposable income in this country is 1000? d. If suddenly this country’s wealth increases, how do you think the equation might change.Also show it in a diagram.
The value of the multiplier is necessarily increased if a. the marginal propensity to consume increases and the marginal propensity to import falls. b. the marginal propensity to consume falls and the tax rate falls. c. the marginal propensity to consume and the marginal propensity to import rise. d. the income tax rate falls and the marginal propensity to import rise.
3. Suppose the MPC is 0.8. The government wants to decrease Total Spending by $600. How should it change G to achieve this goal? Show your work?
4. Benjamin's income increases from $40,000 to $44,000. His consumption increases from $35,000 to $36,000. What is Benjamin's Marginal Propensity to Save? A..19 B..75 C. .81 D. 1.25
1. What would happen to multiplier if investment were to be positively related to income? 2. is it possible for total saving to fall when people beome more thirfty? 3. What is meant by multiplier?Why shoul the value of multiplier rise when people spend more on consumption?
2. If a $580 billion initial increase in spending leads to a $10850 billion change in real GDP, how big is the multiplier?
3. The following table shows income (Y) and consumption (C): Y C Calculate: 100 105 125 I. Marginal Propensity to Consume (MPC) II. Marginal Propensity to Save (MPS) 160 III. Average propensity to save (APS) 200 110 125 140
Y C I G X $ 100 $ 120 $ 20 $ 30 $ 10 $ 300 $ 300 $ 20 $ 30 - $ 10 $ 500 $ 480 $ 20 $ 30 - $ 30 $ 700 $ 660 $ 20 $ 30 - $ 50 a.What is the multiplier? b.What is the equilibrium level of the real GDP? c.What is the value of autonomous consumption?
2. Determine the multiplier and the net effect of the following autonomous changes in spending: a. An influx of $100 billion in government spending when the marginal propensity to consume is 0.75. b. An influx of $250 billion in business investment when the marginal propensity to consume is 0.5. C. An influx of $180 billion in export sales revenue when the marginal propensity to consume is 0.8.
1.In Figure 1, when disposable income is 0, how much is consumption, saving, autonomous consumption, and induced consumption? 2.In Figure 1, when disposable income is 2500, how much is consumption, saving, autonomous consumption, and induced consumption? 3.In Figure 1, when disposable income is 4,000, how much is the consumption, savings, autonomous consumption and induced consumption?
Please see attachment Answer neatly Show all your work. Based on the above diagram: 1. Calculate MPC? 2. If Private Investment increases by 100, calculate the new level of NI. 3. If full-employment NI is at 3000, by how much should Government spending change? 4. What is the new NI, If 1/2 of those government expenditures are financed through taxes?