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Q: If the MPC in an economy is .8, government could close a recessionary expenditure gap of $200…
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Q: True or False If spending exceeds output, real GDP will decline as firms cut back on production.
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Q: How does the MPC differ from the MPS?
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A: Answer to the last two parts are given:
Q: If there is a recessionary gap of $200 Billion and the MPC is .9, how much would government spending…
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A: We are going to find the change in consumption spending to answer this question.
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Q: Definition of expenditure control measure
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Q: If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of $100…
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Q: If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of $160…
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A: MPC means marginal propensity to consume. MPC refers to proportion of additional unit of income…
Q: Provide a brief explanation for autonomous and induced expenditures.
A: Expenditures represents the amount spent on purchase of goods and services. It includes expenditures…
Q: An economy is at full employment. Which of the following can create an inflationary gap. Group of…
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Q: overnments attempt to stimulate economies by offering firms temporary investment tax credits.…
A: Tax credits are the subsidy in taxes provided by the government.
Q: The MPC is 0.5. what happens to the real GDP if the government increases spending by $10 million?
A: Given MPC = 0.5 Increase in government spending = $10
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Q: If the MPC in an economy is 0.90, a $4 billion increase in government spending will ultimately…
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Q: If an economy is in recession, discuss the differing effects created by a tax cut vs. a GDP-G…
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Q: What is the aggregate expenditures function?
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- Question 2 An inflationary gap is the amount by which: O Equilibrium GDP falls short of the full-employment GDP. O Aggregate expenditures exceed any given level of GDP O Saving exceeds investment at the full-employment GDP O Aggregate expenditures exceed the full-employment level of GDPThe economy's current level of equilibrium GDP is $780 billion. The full-employment level of GDP is $800 billion. The multiplier is 4. Given those facts, we know that the economy faces. expenditure gap of. a recessionary; $10 billion O a recessionary; $5 billion an inflationary: $5 billion a recessionary; $20 billion O an inflationary; $20 billion an inflationary; $10 billionFigure 3-3 45° Planned Expenditure 200 + 0.75Y 45 Income (Y) In the figure above: a. Find the equilibrium GDP. What happens to the left of that equilibrium? What happens to the right? b. When income is $1,000, what is the unplanned inventory? c. What is the GDP multiplier? d. What is the tax multiplier? e. How much should government expenditures increase if the government wants to increase GDP from the equilibrium level found at point a) to 1,000? f. How much should taxes decrease if the government wants to increase GDP from the equilibrium level found at point a) to 1,000? Planned Expenditure
- ASAP10:35 PM A O 60 Aggregate Expenditures Schedule 50 Tools 40 C+1 Equilibrium 30 20 10 10 20 30 40 50 Real GDP (billions of dollars) Instructions: In part b, enter your answer as a whole number. In part c, round your answer to 1 decimal place. b. What is the equilibrium GDP for this country? billion c. What is the marginal propensity to consume for this country? Aggregate expenditures (billions of dollars)An increase in lump-sum taxes results in O both the intercept and the slope of the expenditure line increasing. O the intercept of the expenditure line getting larger. the intercept of the expenditure line decreasing. the slope of the expenditure line decreasing. the slope of the expenditure line getting larger.
- An inflationary gap is the amount by which: O Equilibrium GDP falls short of the full-employment GDP. O Aggregate expenditures exceed any given level of GDP. Saving exceeds investment at the full-employment GDP. Aggregate expenditures exceed the full-employment level of GDP. A Moving to another question will save this response. ere to search DELLFigure 25-4 45 Potential GDP Real GDP In Figure 25-4, which expenditure level will result in a recessionary gap? O There will be no deflationary gap. Real ExpendituresQuestion 3: At a level of National Income of AED 30,000 Million, the government announced an increase in expenditures from AED 1000 Million to AED 1500 Million as a stimulus package for infrastructure development and at the same time government also announced an increase in tax from AED 1000 Million to AED 1600 Million. The marginal propensity to consume (MPC) for the country is 0.75. Find the impact of these changes on National Income. Explain the leakages of multiplier
- QUESTION 7 Refer to the diagram. If the full-employment level of GDP is B and aggregate expenditures are at AE3, the: AE, AE, AE, e of k GDP O recessionary expenditure gap is BC. O recessionary expenditure gap is ed. O recessionary expenditure gap is AB. inflationary expenditure gap is BC. O inflationary expenditure gap is ed. Aggregate ExpendituresHomework: Demand-Side Equilibrium: Unemployment or Inflation? The following graph shows the total expenditure line (TE) for an economy where current equilibrium output is $400 billion and potential output is $650 billion. REAL EXPENDITURE (Billions of dollars) § 2 600 500 400 300 200 100 0 0 100 45-degree ling 200 300 400 500 600 REAL GDP (Bilions of dollars) The economy is experiencing TE Potential GDP 700 800 TE equal to $ by billion. Thus, the value of the multiplier for this economy is billion. To close the output gap, government purchases could On the previous graph, shift the TE line to show the change in total expenditure necessary to close the output gap. Note: Select and drag the curve to the desired position. The curve will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther.Match each definition to the appropriate component of aggregate demand. Definition The sum of the expenditures of business firms on new plant, equipment, and software and of households on new homes The goods and services purchased by all levels of government The total amount spent by consumers on newly produced goods and services The difference between exports and imports ⒸNet exports O Government spending Consumer Expenditure Which of the following components represents the largest piece of aggregate demand? O Consumer expenditure O Investment spending O Which of the following components represents the smallest piece of aggregate demand? O Consumer expenditure O Government spending O Investment spending ONet exports Investment Spending Government Spending Net Exports O O O O