If disposable income is 85 per cent of national income, the marginalpropensity to consume (out of disposable income) is 0.7, and importsare 22 per cent of national income, then the marginal propensity tospend on national output is:

The measure which depicts the degree to which a consumer would in turn be spending or saving with…

Answered: If disposable income is 85 per cent of…

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter8: The Keynesian Model

Section: Chapter Questions

Problem 6SQ

See similar textbooks

Similar questions

Analyse the effect on equilibrium national income if the MPC falls from 0.95 to 0.4. Illustrate with the output expenditure and withdrawals-injections approach
In an economy investment expenditure increased by 20 billion and the marginal propensity to consume is 0.1 calculate the increase in income
a) About Country A, what is your estimate of the country's marginal propensity to consume (MPC) based on the following information on its GDP (Y) and the components thereof (in billion dollars) for two past years? Show calculation. Year 1 Year 2 c) GDP C I 11200 8000 2200 12000 8500 2400 G 800 880 The next few parts are about Country B, whose government plans to cut taxes by $24 billion as a measure to fight the current recession. The marginal propensity to consume (MPC) in Country B is known to be 34. There will be no crowding-out effect. e) NX 200 220 b) What is the initial effect (in billion dollars) of the tax cut on Country B's aggregate demand? (The "initial effect" here refers to the effect on AD after only the first round of increased spending.) What is the total effect of the tax cut on aggregate demand? Explain why it is different from the initial effect. d) How does the total effect of this $24 billion tax cut compare to the total effect of a $24 billion increase in…
In an economy S = -60 + 0.2Y and the invesment is 5000 calculate the 1)Equilibrium level of the income 2)Consumption expenditure at equilibrium
please e
Assume that the economy is now governed by a government and begins trading with other economies. The economy is described by the following set of equations. ?=1000+0.5⋅?d ID = 600 G=700 T=400 EX=0.1⋅Y IM=100+0.1⋅Y YD = Y - T Calculate the equilibrium level of output Y* a) 2857 b) 4000 c) 6274 d) 4400 Whats the government expenditure multiplier? Whats the tax multiplier? Whats the ba;anced budget multiplier?
Assume that a nation's marginal propensity to consume (MPC) is 0.75. A highiy productive, cost-cutting technology is developed for the production of commercial airplanes. The total industry expenditure in this nation is $100 million for the immediate acquisition and adoption of this technology. (a) For this nation, identify and explain how much this spending on new technology will change each of the following in the first round: i. Income (GDP) L. Saving i. Consumption (b) Assuming a closed economy and no leakages, identify and explain how much this spending on new technology will change each of the following at the end of the final round: i. Income (GDP) ii. Saving li. Consumption
Calculate the value of consumption expenditure from the following:- National income = $6000 Autonomous consumption = $1000 Marginal propensity to consume = 0.80
The following is a hypothetical estimate of a demand curve for butter over the period 2001–10. Qa = 145 – 1.5P- 0.001Y+ 2P. Where Qa is the quantity of butter sold in grams per person per week; Pis the price of butter (in pence per kg, at 2000 prices); Yis the anmual disposable income per head (in £s at 2000 prices); Pa is the price of margarine (in pence per kg, at 2000 prices). (a) If P is 50 pence, Yis £20 000 and P is 40 pence, what is the estimated value of Qa? (b) If the price of butter went up by 6 pence per kilo, all other things equal, what would happen to the estimated demand for butter? (c) Going back to the original price of 50 pence, if the value of Y now rose to £22,000 what would happen to the estimated demand for butter? (d) What is the income elasticity of demand for butter according to your calculations in (c)? What sort of good is butter according to this result? (e) Again, going back to the original demand, if the price of margarine now rose by 10 pence what would…
If MPC is 0.12 and the change in income is $3300 Calculate change in consumption
Consider an economy similar to that in the preceding question in which investment is also $200, government purchases are also $500, net exports are also $30, and the price level is also fixed. But taxes now vary with income and, as a result, the consumption schedule looks like the following: GDP Taxes DI C $1,360 $320 $1,040 $810 1,480 360 1,120 870 1,600 400 1,200 930 1,720 440 1,280 990 1,840 480 1,360 1,050 Find the equilibrium graphically. What is the marginal propensity to consume? What is the tax rate? Use your diagram to show the effect of a decrease of $60 in government purchases. What is the multiplier? Compare this answer to your answer to Test Yourself Question 1. What do you conclude? GDP…
At equilibrium expenditure, unplanned change in inventories must be positive * O True O False

SEE MORE QUESTIONS

Recommended textbooks for you

MACROECONOMICS FOR TODAY

Economics

ISBN:

9781337613057

Author:

Tucker

Publisher:

CENGAGE L

Economics For Today

Economics

ISBN:

9781337613040

Author:

Tucker

Publisher:

Cengage Learning

Economics (MindTap Course List)

Economics

ISBN:

9781337617383

Author:

Roger A. Arnold

Publisher:

Cengage Learning

MACROECONOMICS FOR TODAY

Economics

ISBN:

9781337613057

Author:

Tucker

Publisher:

CENGAGE L

Economics For Today

Economics

ISBN:

9781337613040

Author:

Tucker

Publisher:

Cengage Learning

Economics (MindTap Course List)

Economics

ISBN:

9781337617383

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Macroeconomics

Economics

ISBN:

9781337617390

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Exploring Economics

Economics

ISBN:

9781544336329

Author:

Robert L. Sexton

Publisher:

SAGE Publications, Inc

MACROECONOMICS

Economics

ISBN:

9781337794985

Author:

Baumol

Publisher:

CENGAGE L

SEE MORE TEXTBOOKS

If disposable income is 85 per cent of national income, the marginal propensity to consume (out of disposable income) is 0.7, and imports are 22 per cent of national income, then the marginal propensity to spend on national output is: