The graph below illustrates the money demand and investment demand for the economies of Pabst and Kokanee.Interest rateInterest rate15131195311513119531706080709080100 110 120Quantity of money90 100 110 120Quantity of moneyMDMSMSMDPabstInterest rateKokaneeInterest rate12108641211109865430010102030 40 50 60Quantity of investment20 30 40Quantity of investment50704(60,8)60 a. If money supply is increased by 15, what will be the new interest rate? Round your answers to one decimal place.Pabst:Kokanee:b. What will be the increase in investment spending as a result of this new interest rate?Pabst:Kokanee:%Kokanee:%c. If the multiplier is 3 in each economy, what will be the increase in GDP?Pabst:d. In which economy would monetary policy be more effective in closing a recessionary gap?(Click to select)

The equilibrium is where the money demand curve intersects the money supply curve. The interest rate…

a. If money supply is increased by 15, what will be the new interest rate? Round your answers to one decimal place. Pabst: Kokanee: b. What will be the increase in investment spending as a result of this new interest rate? Pabst: Kokanee: % Pabst: c. If the multiplier is 3 in each economy, what will be the increase in GDP? Kokanee: %

a. If money supply is increased by 15, what will be the new interest rate? Round your answers to one decimal place. Pabst: Kokanee: b. What will be the increase in investment spending as a result of this new interest rate? Pabst: Kokanee: % Pabst: c. If the multiplier is 3 in each economy, what will be the increase in GDP? Kokanee: %

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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An Economy has no imports or taxes, the MPC is 0.90 and real GDP is $12 trillion. If businesses increase investment by $0.1 trillion: 1. Calculate the multiplier? 2. Calculate the change in real GDP? 3. Calculate the new level of real GDP?
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14. If MPC is 0.6 and government spending increases by 350, how much does gross domestic product change? 15. If MPC is 0.6 and government tax decreases by 350, how much does gross domestic product change? (NOTE: Refer to the textbook) 16. From #14 and #15, can you tell which policy tool does have a higher multiplier effect?
You are given the following information regarding a hypothetical economy: Consumption function is C= 0.3+0.8(Y-T) Investment I=3.5- 50i G= 3 T= 2.5 The demand for real money is M/P=2+0.2Y-50i. The real stock of money is 3.
Instructions: Round your responses to two decimal places. If taxes were cut by $1 trillion and the MPC was 0.88, by how much would total spending trillion a. increase in the first year with two spending cycles per year?
pls send me answer of all the parts in details and i will rate you.
2. Consumption function: C=500+0.8Yd, net tax: T=500, governmentspending: G=500, investment: I=1200, export: X=500 and imprt: M=700. According to this; a) Calculate the equilibrium level of output(Ye). b) Calculate the consumption and saving at Ye. c) Find the change in equilibrium level of output(Ye) if government spending increase 200. Use governmentspending multiplier.
1.The spending multiplier effect becomes bigger if a. the MPC becomes bigger and the MPM becomes smaller b. both the MPC and the MPM become bigger c. both the MPC and the MPM become smaller d. the MPC becomes smaller and the MPM becomes bigger 2. "The U.S. Department of Commerce has estimated that if U.S. manufacturers use metric measures, their increased ability to compete on world markets should increase exports by about $600 million and thus benefit the U.S. economy by between $1.2 billion and $1.8 billion." These numbers suggest that a. exports have a much smaller multiplier impact than other kinds of spending. b. the export spending multiplier is between 2 and 3. c. it takes between $1.2 and $1.8 billion increase in income to generate a $600 million increase in exports. d. imports should increase by between $1.2 and $1.8 billion. 3. The functions of the Federal Reserve System include all of the following, except: a.controlling the money supply b. promoting the stability of the…
Suppose there are no imports, taxes or other leakages in the economy. If the Marginal Propensity to Consume is .75 and the government increases spending by $60 billion, by how much would output increase in the economy?
If a $568 increase in investment spending increases income by $568 in the first round of the multiplier process and by $483 in the second round, income will eventually increase by how much? Round to the nearest second decimal.
please anwer ponit no:- 4, 3 and 2. (It will be nice if u answer all points)
Consider the following diagram, in which the current short-run equilibrium is at point A. At point A, the economy has If the marginal propensity to save equals 0.20, calculate the change in government spending that could eliminate the gap. S trillion. (Round your answer to two decimal places.) CO Price Level 40 120 115 111 0 LRAS 22 22.5 23 Real GDP per Year ($ trillion) SRA AD