**Consumption Equation and Multiplier Calculation**In this exercise, we are given the following equation to describe the consumption function:\[ C = 20 + 0.9Y \]Where:- $ C $ represents Consumption- $ Y $ is disposable income, which is given as $800 billion**Question:**What is the Multiplier?**Options:**a) 90 b) 0.1 c) 10 d) 20 **Explanation:**- To find the multiplier in macroeconomics, we use the formula: \[ \text{Multiplier} = \frac{1}{1 - \text{MPC}} \] where MPC is the marginal propensity to consume. Here, the MPC is 0.9 (from the equation $ 0.9Y $).- Using the formula: \[ \text{Multiplier} = \frac{1}{1 - 0.9} = \frac{1}{0.1} = 10 \]Therefore, the correct answer is option c) 10.

Answered: Image /qna-images/answer/ce63e948-04f2-4b1c-bcce-83729498acd7.jpg

Answered: If C = 20 + 0.9Y C= Consumption Y=…

Business

Economics

If C = 20 + 0.9Y C= Consumption Y= disposable income $800 billion What is the Multipler? 90 601 c 10 a 20

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Is it correct that if revenue budget balances capital budget also balances true/false

A: According to the given The revenue budget means detailing the initial sources from where the…

Q: The tree in Karura forest grow such that the volume of timber at time t can be represented as 900t +…

A: Volume of timber at time 't' is given by the following function: Q(t) = 900t + 50t2 + 60t3 + 7t4…

Q: Outline the steps for determining the IRR for a mixed investment?

A: The metric used in capital budgeting help to assess the potential investments profit is known as IRR…

Q: How can we calculate the net future of the project by using the equation?

A: Net future value, or NFV, is used to calculate future value of a current stream of payments.

Q: Organize each of the following equations to express P as a function of Q. Q as a function of P P as…

A: Answer in step 2

Q: Which of the following is not an approach that can be used to perform a capital budgeting economic…

A: An economic analysis evaluates the costs and benefits. It ranks the projects based on economic…

Q: Calculate the amount of L

A: Q = KL r = 50 w = 100 Q = 500

Q: emitting (LED) light req years, make financial sense? Suppose a typical 60-watt incandescent light…

A: Assume, Break-even cost is C.Equated annua l cost function of 60watt bu lb…

Q: 1. Specialization and productio Suppose France produces only tablets and smartphones. The resources…

A: Answers 1.Remain constant Suppose France produces only tablets and smartphones. The resources…

Q: Hello, I get about 1,000 on this one, I think I am using the factor tables wrong, or not using the…

A: where:Present Value is the present value of the cash flowCash Flow is the cash flow in the future…

Q: If an investment has an estimated cost of £1000, and it offers £550 the first and the second year…

A: The internal rate of return (IRR) is the interest rate that makes the net present value (NPV) zero.…

Q: P = ? 0 $500 $500 $500 $500 $500 $500 0 2 4 5 i = 10% $500 $500 $500 $500 6 7 8 $500 10 11 N 12 13…

A: Present value P0 is the sum of discounted values of future cash flows. It represents the equivalent…

Q: How can we consider the two mutually exclusive investment alternatives?

A: Investments are very important for the economy as the investment expenditure forms an important…

Q: Years 2022 2021 2020 Revenue of Dollarama $4,331 B $ 4,026 B $ 3,787 B

A: Economics for business is the empirical application of economic ideas and theories to the evaluation…

Q: Given that C= $7,000 + 0.05 Yd, if the level of disposable income is $14,000, the level of…

A: Consumption function C = 7000 + 0.05Yd Disposable income = $14000

Q: 5. Under the following parameter assumptions: A=10,n=1, d=0, B=1/2, a = 1/3, and ko= = 0.0500 kt an…

A: An economic production model that exhibits long run growth of the economy is known as Solow–Swan…

Q: Critically compare the principles of the IRR and net present value methods including their…

A: B. Compare the principles of the IRR and net present value The net present value rule states that…

Question

**Consumption Equation and Multiplier Calculation**

In this exercise, we are given the following equation to describe the consumption function:

\[ C = 20 + 0.9Y \]

Where:
- $ C $ represents Consumption
- $ Y $ is disposable income, which is given as $800 billion

**Question:**
What is the Multiplier?

**Options:**
a) 90
b) 0.1
c) 10
d) 20

**Explanation:**
- To find the multiplier in macroeconomics, we use the formula:
\[ \text{Multiplier} = \frac{1}{1 - \text{MPC}} \]
where MPC is the marginal propensity to consume. Here, the MPC is 0.9 (from the equation $ 0.9Y $).

- Using the formula:
\[ \text{Multiplier} = \frac{1}{1 - 0.9} = \frac{1}{0.1} = 10 \]

Therefore, the correct answer is option c) 10.

Expert Solution

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!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

A project that will provde annual cash flows of $2,350 for nine years costs $9,700 today. a. At a required return of 12 percent, what is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. At a required return of 28 percent, what is the NPV of the project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. At what discount rate would you be indifferent between accepting the project and rejecting it? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) а. NPV b. NPV C. Discount rate %
Illustrate how a project's profitability changes under an inflationary economy?
I need answer typing no chatgpt used
Typed plzzz and asap Thanks
The following cash flows result from a potential construction contract for Erstwhile Engineering. 1. Receipts of $600,000 at the start of the contract and $1,200,000 at the end of the fourth year. 2. Expenditures at the end of the first year of $500,000 and at the end of the second year of $1,100,000. 3. A net cash flow of zero at the end of the third year. Using an appropriate rate of return method, for a MARR of 25 percent, should Erstwhile Engineering accept this project? Erstwhile Engineering of return is percent, which is (Round to two decimal places as needed.) accept the project because the rate the MARR.
This person earns $1000 of income today and $2000 income next year. Point C represents his consumption if he doesn't borrow or lend. If the interest rate is 10%, his Consumption Next Year at Point A is? Censumption Next Year