Answered: 1) Would an increase in government…

1) Would an increase in government spending by $160 billion be sufficient to accomplish its goal? How much is required to close the negative GDP gap? 2) Suppose Bank A, which faces a required

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Macroeconomics: Assuming marginal propensity to consume is 0.5. If there is a shock to the economy that increases investment spending by 200 billion dollars what will the total Change to GDP be? (Ignore taxes and imports)
The total expenditure in Macroland begins with these initial levels (in trillions of dollars): GDP = 10; autonomous consumption=1, Investment = 2; Government = 2; Net Exports = 0 and T=2. Assume MPC %3D was 0.75 but suddenly and as a result of a shock to consumer sentiments decreases to 0.7. find the change in the equilibrium level of income. 4 None of the answers.
In the country of Arcadia, the minimum amount of consumption spending that will occur in a given year is $50- that is, no matter what level of income households have, the aggregate amount of consumption spending in the economy will be at least $50. In addition, for every extra dollar of national income, consumption spending will increase by $0.75. (Note: For the entirety of this problem, assume that Taxes = trans fers = 0, and the aggregate price level in Arcadia is fixed.) a. What is the marginal propensity to consume in Arcadia? [TYPE YOUR ANSWER BELOW] b. Write out the consumption function for the Arcadian economy. [TYPE YOUR ANSWER BELOW]
Mexico's real GDP fell from 4.5 trillion pesos to 3.8 trillion pesos over the first part of 2020. In that same time, its consumer spending fell from 3.1 trillion pesos to 2.5 trillion pesos. Assume that real GDP represents disposable income. Using these values, what is the size of the tax cut multiplier? (Round answers to one decimal place.
1) Assume that Canadian government taxes away $0.15 of each dollar of new income, that 35% of the remaining $0.85 of disposable income is spent on imports, and that 2% of disposable income is saved. Enter your responses below rounded to 2 decimal places. a. The marginal propensity to withdraw is . b. From each new dollar of income $ is spent on domestic consumption items.c. The value of the Canadian spending multiplier is . 2) In each case below a particular fiscal policy affects an economy's AD curve via the spending multiplier. Calculate the spending multiplier and find the direction and size of the shift in the AD curve. Enter your responses for the spending multiplier rounded to 2 decimal places, and size of the shift of the AD curve rounded to 1 decimal place. Do not put minus signs in your answers. a. If government purchases increase by $3 billion in an economy with an MPW of 0.65 then the spending multiplier is and the AD curve finally shifts to the by $…
We know the following about a closed economy: (Y-T), • Consumption: C = 20 + 0.7 • Investment: I = 4c Government expenditures: G= 30 • Taxes: T = 0.2Y When the government increases its expenditures without changing the way it collects taxes, there is a multiplier effect. What is the value of the multiplier? Select one (two digits after the decimal): a. 2.33 b. 2.50 c. 3.33 d. 4.00
Suppose a closed economy has an aggregate consumption function given by C = 300 + 0.75Yd and generates $3000 output and income in equilibrium. Suppose also that the government collects a lump-sum tax of 350. %D How much will the private sector be saving total in equilibrium? (round your answer to the nearest whole value)
Even during a financial recession, consumers tend to increase spending in _______
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Question Suppose that the marginal propensity to consume is 0.75 and the total change in real GDP is $100, what must have been the initial change in aggregate expenditures? Provide your answer below:
One last time, please consider a closed economy with the following information: • Economic investment = $4500 • Private savings = $3000 Output (income) = $16,000 Consumption = $11,000 This economy has no transfer payments; in other words, total taxes and "net taxes" are the same thing. Carefully following all numeric instructions, calculate this economy's taxes (T). Note that there are no transfer payments.
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