5. Suppose damages caused by a typhoon reduced output by P600 million. In response, the government plans to increase expenditure. Assume that the marginal propensity to consume is stable at 80%. a. In order to reach the pre-typhoon level of output, by how much should government expenditure increase?

5. Suppose damages caused by a typhoon reduced output by P600 million. In response, the government plans to increase expenditure. Assume that the marginal propensity to consume is stable at 80%. a. In order to reach the pre-typhoon level of output, by how much should government expenditure increase?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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97) You observe that unplanned inventories are increasing. You predict that there will be ________. A) a business cycle B) an expansion C) a trough D) a recession 98) Business cycle turning points are A) unaffected by, and unrelated to the multiplier. B) easy to predict. C) brought about by changes in autonomous expenditures that are then subject to the multiplier effect. D) None of the above is correct. 99) Which of the following does NOT occur as the economy moves from an expansion to a recession? A) An initial decrease in autonomous spending is the trigger that creates the business cycle turning point. B) The change in planned spending exceeds the change in real GDP. C) The multiplier process reinforces any decrease in spending and pushes the economy into recession. D) Incomes fall during recessions as firms cut production in response to unplanned increases in inventories. 100) Which of the following is INCORRECT? A) Expansions usually begin…
Given the data in the table below, calculate the marginal propensity to save. Consumption Personal Income Personal Taxes $750 $350 $225 $540 $1,500 $450 Select one: а. О.81 O b. I'll take 2 Points О с. 0.19 O d. 0.36 O e. 0.75 O f. Not enough data to solve g. 0.25 O h. 0.64
During the Covid-19 recession, from the fourth quarter of 2019 to the fourth quarter of 2020, consumer spending on residential construction ________ and consumer spending on services ________. Part 2 A. declined by 20 percent; increased by 20 percent B. increased by 5 percent; increased by 10 percent C. increased by 20 percent; declined by 5 percent D. declined by 25 percent; declined by 40 percent
QUESTION 6 Potential GDP Aggregate expenditure AE, 45° Y. Real GDP (Y) When real GDP is greater than Yo in the diagram above: O A. - inventories will decrease OB. ·Aggregate expenditure will be less than Real GDP OC. Aggregate expenditure will be equal to Real GDP OD. O D. inventories will increase QUESTION 7 Y G Xn $1,000 $1,400 1,400 1,400 1,400 1,400 $0 $800 -$200 2,500 5,000 7,500 10,000 2,300 3,800 5,300 6,800 1,000 1,000 1,000 1,000 -200 -200 -200 -200 Suppose you are given the data in the table above for a hypothetical economy. All data are in billions of dollars. Yis actual real GDP, and C, Ip, G, and Xn are the consumption, planned investment, government purchases, and net exports components of aggregate expenditures, respectively. Calculate the equilibrium GDP (give your answer in billions of $) Aggregate Expenditure
Allie has a marginal propensity to consume of 0.75. What does this mean? a. He's spending more than he's making in income b. 75 cents of every additional dollar of his income is saved. c. 75 cents of every additional dollar of his income is spent on consumption. d. 25 cents of every additional dollar of his income is spent on consumption.
Problem 2. P220 B During the term of Pres. Benigno Aquino III was the scandal over lawmakers' misuse of PDAF (Priority Development Assistance Fund) or known as "pork barrel". Assuming that the fund went to the right hands', answer the following: 1. How much would have been generated in total income of the economy if the initial government spending is P220 B? Assume the marginal propensity to consume is 0.8. Show your solution. 2. What is the multiplier effect? (Note: Answer is numeric).
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All of the following are true when there is an unplanned decrease in inventories, except: O a. Actual investment is greater than planned investment O b. Real GDP will be rising O c. GDP is less than aggregate expenditures O d. Saving is less than planned investment
Q4
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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.
11. For an economy, if the marginal propensity to consume is 0.75, how much will the national income increase for an initial investment increase of CNY100 million yuan?