7. Suppose in the Simple Keynesian model that the marginal propensity to consume is b 0.75. If both taxes, T, and government spending, G, are increased by $400, then equilibrium Y decreases by $1.200. increases by $1.600. increases by $400. neither increases nor decreases. none of the other options. OOO C
7. Suppose in the Simple Keynesian model that the marginal propensity to consume is b 0.75. If both taxes, T, and government spending, G, are increased by $400, then equilibrium Y decreases by $1.200. increases by $1.600. increases by $400. neither increases nor decreases. none of the other options. OOO C
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: Six Debates Over Macroeconomic Policy
Section: Chapter Questions
Problem 2CQQ
Related questions
Question
![7. Suppose in the Simple Keynesian model that the marginal propensity to consume
is b = 0.75. If both taxes, T, and government spending, G, are increased by $400, then
equilibrium Y
O decreases by $1,200.
increases by $1.600.
increases by $400.
neither increases nor decreases.
none of the other options.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb9e84ed1-dead-4e59-995d-c6d6a75232f6%2F603c98fd-6eb2-4d23-97bc-04309154eba5%2Flvi4q48_processed.jpeg&w=3840&q=75)
Transcribed Image Text:7. Suppose in the Simple Keynesian model that the marginal propensity to consume
is b = 0.75. If both taxes, T, and government spending, G, are increased by $400, then
equilibrium Y
O decreases by $1,200.
increases by $1.600.
increases by $400.
neither increases nor decreases.
none of the other options.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![Brief Principles of Macroeconomics (MindTap Cours…](https://www.bartleby.com/isbn_cover_images/9781337091985/9781337091985_smallCoverImage.gif)
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![MACROECONOMICS FOR TODAY](https://www.bartleby.com/isbn_cover_images/9781337613057/9781337613057_smallCoverImage.gif)
![Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613040/9781337613040_smallCoverImage.gif)
![Brief Principles of Macroeconomics (MindTap Cours…](https://www.bartleby.com/isbn_cover_images/9781337091985/9781337091985_smallCoverImage.gif)
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![MACROECONOMICS FOR TODAY](https://www.bartleby.com/isbn_cover_images/9781337613057/9781337613057_smallCoverImage.gif)
![Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613040/9781337613040_smallCoverImage.gif)
![Survey Of Economics](https://www.bartleby.com/isbn_cover_images/9781337111522/9781337111522_smallCoverImage.gif)
![Macroeconomics: Principles and Policy (MindTap Co…](https://www.bartleby.com/isbn_cover_images/9781305280601/9781305280601_smallCoverImage.gif)
Macroeconomics: Principles and Policy (MindTap Co…
Economics
ISBN:
9781305280601
Author:
William J. Baumol, Alan S. Blinder
Publisher:
Cengage Learning
![MACROECONOMICS](https://www.bartleby.com/isbn_cover_images/9781337794985/9781337794985_smallCoverImage.gif)