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- Which of the following would be most likely to increase consumption spending? Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a A reduction in consumer credit card debt b A drop in stock prices c A higher interest rate d The expectation of lower future pricesWhich of the following increases the size of the expenditure multiplier? a. a decrease in the marginal propensity to consume O b. a decrease in the marginal propensity to import О с. an increase in investment O d. an increase in autonomous spendingThe table below provides Income and consumption Data in billions of dollars. Answer question below based on it.Disposable Consumption SavingsIncome100 80 --------200 150 --------- Using information from question 21, calculate the marginal propensity to consume for the economy? a. 0.8 b. 0.2 c. 0.3 d. 0.7
- Suppose that Dell Corporation has 20,000 computersin its warehouses on December 31, 2019, ready tobe shipped to merchants (each computer is valued at$500). By December 31, 2020, Dell Corporation has25,000 computers ready to be shipped, each valuedat $450.a. Calculate Dell’s inventory on December 31, 2019.b. Calculate Dell’s inventory investment in 2020.c. What happens to inventory spending during theearly stages of an economic recession?Income and Expenditure – End of Chapter Problem An economy has a marginal propensity to consume of 0.5, and Y*, the income-expenditure cquilibrium GDP, cquals $500 billion. Given an autonomous increase in planned investment of $10 billion, answer the following questions. a. What is the value of the multiplier? Value of the multiplier = b. What would you cxpect the total change in Y* to be bascd on the multiplicr formula? Change in Y* based on the multiplier = billion c. What is the total change in real GDP after the 10 rounds? It may be beneficial to make a table on a separate sheet of paper to calculate the change in real GDP for each of the rounds, and then add up the values. c. What is the total change in real GDP after the 10 rounds? It may be beneficial to make a table on a separate sheet of paper to calculate the change in real GDP for each of the rounds, and then add up the values. Total change in real GDP (10 rounds) = billion d. How do your answers to the change in GDP and Y…1. Briefly define the following terms and explain the relationship 2. E between them: . Multiplier MPC ... Actual investment Planned investment Aggregate expenditure. Aggregate output ..... Real GDP .Aggregate income ... in CHAP habit. They have a rule that everyone saves exactly 25 percent of income. Assume that planned investment is fixed and remains at 75 billion Yuck dollars. You are asked by the business editor of the Weird Herald, the local newspaper, to predict the economic events of the next few months. By using the data given, can you make a forecast? What is likely to happen to inventories? What is likely to happen to the level of real GDP? Is the economy at an equilibrium? When will things stop changing? 7. T
- Consumption C₂ B Refer to Figure 10-3. Marginal propensity to consume is equal to a. CoF divided by AF. O b. CoA divided by AF. OC. AF divided by CoA. Od. AF divided by CoF. Figure 10-3 Yds [VO₂ Disposable Income Yd.How do inventories change when aggregate planned expenditure is less than real GDP? If aggregate planned expenditure is less than real GDP, inventories O A. increase, and the AE curve shifts upward O B. increase, and as real GDP decreases a movement down along the AE curve occurs C. decrease, and as real GDP increases a movement up along the AE curve occurs O D. decrease, and the AE curve shifts downwardWhich of the following would be most likely to increase consumption spending? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a A reduction in consumer credit card debt A drop in stock prices A higher interest rate C d The expectation of lower future prices
- In an economy, planned aggregate expenditure is given by PAE = $500 billion + 0.6Y, where Y is equal to national income. a. What is the value of autonomous expenditure? billion b. What is the value of the marginal propensity to consume? c. What is the value of the expenditure multiplier? d. What is the value of equilibrium output? billionAssume in country Y, the average marginal propensity to save is 0.2. When the aggregateincome is zero, consumers spend 50 to consume. Derive the saving function and consumptionfunction for this country. What happens to consumption when the propensity to savedecreases to 0.1? Explain your answer and show this on the graph.Initital $10 increase in investment expands GDP by $10 in first round of multiplier process. the 2nd round both GDP and Consumption rise $6. 1. what is the Marginal Propensity to Consume? 2. What is the size of the mulitplyer?
