Q: Suppose the MPC is .90 and the MPI is .10. If government expenditures go up $ 100 billion while…
A: The expenditure multiplier shows the impact of change in autonomous spending on total spending and…
Q: What is your MPC? Would a welfare recipient and a millionaire have the same MPC? What determines a…
A: MPC=∆C∆Y MPC(Marginal Propensity to Consume) is the ratio of the change in consumption(C) and the…
Q: Two countries are in a recession. Country A has an MPC of 0.8 and Country B has an MPC of 0.6. In…
A: Country A MPC = 0.8G Government Spending Multiplier=11-MPCGovernment Spending…
Q: The slope of the consumption function is positive and equals 1-MPC True False
A: A consumption function shows the relationship between desired consumption expenditure and desired…
Q: Suppose the MPC = 0.6? What will be the government spending multiplier? If, in this economy,…
A: An increase in the government expenditure means increase in the national income of the country. The…
Q: Assume that the MPC is 0.9 and investment falls by $30 billion. What is the change in real GDP?
A: mpc is 0.9. Multiplier(M)= 1/1-mpc
Q: If you spend $100 and the MPC is 0.9, how much will total GDP rise because of this spending of $100…
A: In an economy, any change in spending by the people of a country has the multiplier impact on the…
Q: If C=20 I= 30 G=10 NX=-15 MPC=2/3 T= 30% T=0.3Y What is the equilibrium level of output Y for which…
A: The equilibrium real output and price are determined by the interaction of aggregate demand and…
Q: If the consumption function in the economy is given as C = 400 + 0.6(Yd), what is the MPS? a. 0.6…
A: MPC = coefficient of Yd = 0.6 MPS = 1 - MPC = 1 - 0.6 = 0.4
Q: With an MPC of 0.8, government spending increases $20 billion while taxes decrease $10 billion.…
A: The effect of increase in government spending can be seen as: Multiplier: 11-MPC=11-0.8=5 The…
Q: If MPC was equal to 0.5, would doubling your income double your consumption spending
A: The marginal propensity to consume (MPC) refers to the incremental change in income that is consumed…
Q: The value of MPC is 0.21 Find the value of MPS
A: # The relationship between MPS and MPC is :- MPS = 1 - MPC This is because the sum of MPS and MPC is…
Q: Suppose the MPC is .80, the MPI is .10, and the income tax rate is 10 percent. What is the…
A: Given that, MPC = 0.80, MPI = 0.10 and income tax rate is 10 percent.
Q: When a business buys a new computer to design its product, this spending is called? A. Goverment…
A: Expenditure- It is the amount that is spent on something. It is divided into four parts i.e.…
Q: Investment increases by $200 million and the value of MPC is 0.75. What would be the total increase…
A: Total increase in spending = multiplier * increase in spending Multiplier= 1/(1-MPC)…
Q: Suppose an economy has an MPC = 0.875. 1. If government spending increase by $100, how much…
A: In economics, the marginal propensity to consume is a metric that quantifies induced consumption,…
Q: An increase in government spending will likely cause which of the following? An increase in the…
A: The macroeconomic equilibrium in an economy is determined by the aggregate demand and aggregate…
Q: Suppose the MPC = 0.6. If income increases by $100 billion, by how much would consumption change?…
A: MPC = 0.6 If income increases by $100 billion
Q: Explain what happens to consumption, investment, and the interest rate when the government increases…
A: Taxes: These are primary sources of income for the government.
Q: If the government spends 10 million and the multiplier is 5, then real GDP will increase by: Group…
A: If the government spending = 10 million Multiplier = 5 Then government spending multiplier is…
Q: Aggregate expenditure is 790. Income is 730 and consumption is 720, income increases to 750 and…
A: “Hey, since there are multiple subpart questions posted, we will answer the first three subpart…
Q: What would happen to the multiplier if the MPC were to fall? The multiplier would stay the same The…
A: Multiplier refers how much time money multiplied in market it depend on the level of consumption ,…
Q: The MPC measures the relationship between: a change in consumption and a change in income.…
A: Option A is correct
Q: Calculate the value of MPS when the value of MPC is 0.13
A: The formula for MPS is given as:- MPS = 1 - MPC
Q: If national income increases by $20 million and consumption increases by $5 million, the marginal…
A: Given: Change in consumption = 5 million Change in income = $20 million
Q: If the MPC is 0.8 and investment increases by $5 billion, the equilibrium GDP will Multiple Choice…
A: Given; Increase in investment= $5 billion MPC= 0.8 Change in GDP formula; where; ΔY= Change in GDP…
Q: Disposable income is the amount a household has A after subtracting autonomous spending. B…
A: Disposable income is the income the consumer has which is available for spending.
Q: Suppose the MPC in an economy is 0.95. What should the government do with taxes if they want to…
A: The magnitude of change in income due to change in autonomous spending is known as multiplier. The…
Q: Suppose that an economy is in equilibrium at a level of output of $2000 million. Suppose further…
A: In an economy, a full employment level is one at which an economy can produce the potential level of…
Q: If planned expenditures are below actual production, what will happen to income? Explain the…
A: If planned expenditure is below than the actual production, then the income will decrease. Because,…
Q: The marginal propensity to consume is typically a. between -1.0 and 1.0 b. between zero and…
A: Marginal propensity to consume refers to the increase in consumption with a dollar increase in…
Q: MPS is 0.10 B) MPC is 0.90 C) Multiplier is 10 D) All of the above
A: MPS is referred to Marginal Propensity to Save. It is the part of each extra dollar($) of income(Y)…
Q: Q1:You are given the following income-expenditures model for an economy : Consumption C =…
A: Given Information: Consumption C = 300 +0.64Yd Tax (T) = $60 Government expenditure G = $100…
Q: If the MPC in an economy equals 0.8, and disposable income falls by P100, consumption spending will…
A: MPC stands for Marginal Propensity to Consume. It measures the spending on consumption for…
Q: net taxes were lowered from $5000 to $1000, the MPC is .75, and autonomous consumption spending is…
A: Disposable income refers to the remaining amount after paying all the necessary taxes.
Q: MPC is 0.875. When tax increases by $1, GDP will decrease by $8. by $1, GDP will decrease by $7. by…
A: MPC = 0.875 Using the Tax multiplier formula
Q: If the MPC is 0.8 and investment increases by $3 billion, the equilibrium GDP will increase by $15…
A: A fiscal multiplier provides the number by which iteration occurs in the expansion or contraction of…
Q: The expenditure line is steeper than the 45-degree line. slopes upward because consumption depends…
A: Expenditure line is flatter than a 45 degree line. this is because for every increase in disposable…
Q: Suppose that an economy is in equilibrium at a level of output of $600 million. Suppose further that…
A: In an economy, a full employment level is one at which an economy can produce the potential level of…
Q: Refer to the figure at right. The equilibrium level of real GDP will occur A. at point A. B. to…
A: The gross domestic product (real GDP) is the adjusted inflation rate that reflects the value of all…
Q: In a private closed economy where MPC = 0.90, if consumers reduce their spending by $5 billion and…
A: Given the MPC = 0.90 Reduction in consumption = $5 billion Decrease in investment = $4 billion
Q: Consumption and Saving are called mirror images of each other. Explain in detail also add MPC and…
A: The use of commodities and services in an economy, or the volume of commodities and services used,…
Q: What happens if there is a rise in the marginal propensity to consume (MPC) a) Lowers the value of…
A: The marginal propensity to consume shows the ratio of change in consumption and change in income. In…
Q: Keynes stipulated that there are two determinants of investment. They are A,B,C, OR D ONE ANSWER A…
A: Savings- Investment determinants are key assumptions or building blocks of Keynesian study of…
Q: Our economist estimate that citizens in our country have an MPC of 0.90. To increase GDP by $1,000,…
A: GIVEN DATA Our economist estimate that citizens in our country have an MPC of 0.90. To…
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?
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- Describe the following term in your own words. Balanced budgetHow will the revenues for the bottom line with a budget of $3.4 trillion affect our economy?If the government wants to increase real GDP levels, it could A) decrease government expenditures and increase taxes. B) increase government expenditures. C) decrease government expenditures. D) increase taxes.
- MPC. Explain in short.Logically discuss the impact of the increase in government taxes on consumption.Alien Advisor Our economists have redone their calculations. They now estimate that citizens in our country have an MPC of 0.80. We can fix the problem by decreasing GDP by 850. How much should we increase taxes?
- Why are budget cuts a good thing?Our economist estimate that citizens in our country have an MPC of 0.90. To increase GDP by $1,000, how much should we increase government spending?Suppose the MPC = 0.6? What will be the government spending multiplier? If, in this economy, government spending (G) increases by $300, what will happen to Total Spending? Show your work