I'm doing economics homework and the question is asking If taxes were cut by $1 trillion and the MPC was 0.93, by how much would total spending increase in the first year with two spending cycles a year. Do I need to know MPS?

Q: The following table shows consumption (C), investment spending (I), and government purchases (G),…

A: Assume that, the income tax rate is 25%.  Base consumption is $100 (i.e., the consumption at zero…

Q: If the spending multiplier is 2.5 and the economy is in a $500 billion contractionary gap, how much…

A: The contractionary gap means real GDP is less than the potential GDP such that that the economy is…

Q: What is meant by fiscal policy? How far can it be used to ensure, a high level of employment?

A: In a market economy, decisions are taken by the market forces and the government has limited…

Q: 2) Current Real GDP = $21.5T Potential Real GDP = $20T MPS = .2 How much would be necessary to close…

A: Recessionary gap refers to the gap between potential output and actual output where actual output is…

Q: Why would a higher tax rate lower the government purchases multiplier? What does the tax rate have…

A: Let us take the equilibrium condition of the goods market - Y = C + I + G  Where , C = c0 + c1 (Yd )…

Q: Should fiscal policy encourage more consumption or more saving? Does it matter? I need a reason why.

A: The fiscal (F) and monetary (M) policies help to control and maintain economic fluctuations such as…

Q: Suppose that the typical Canadian spends 80 percent of their income. There is an income tax rate is…

A: The tax multiplier helps to measure how the change in taxes will alter GDP. The consumer spending…

Q: Economists refer to the result in the IS-MPR diagram as “crowding out.”What gets crowded out and…

A: Crowding out effect is the situation where public investment crowds out private investment.

Q: Calculate MPS if we know that MPC Is 0.67

A: The information given is the value of Marginal propensity to Consume which is:- 0.67 We have to find…

Q: Use the following information on economy X to answer the questions below. Consumption function: C =…

A: please find the calculations below.

Q: If an economy’s spending multiplier is equal to 4, what is its MPC and MPS?

A: The marginal product of consumption (MPC) measures the change in consumption due to a change in…

Q: How can a tax cut increase investment, and what is the impact on the economy?

A: A tax is a compulsory financial charge or levy imposed by a government on individuals, businesses,…

Q: What is an expansionary gap? What fiscal policy might close that gap?

A: Answer: Introduction: Expansionary gap: when the actual output level exceeds the potential output…

Q: If the MPC is 0.9 what will happen to GDP if the government cut spending bt S2.

A: Given data: MPC, c=0.9Government spending, G=$2

Q: What multiplier would you use to work out a decrease of 20%?

A: A multiplier in economics describes the connection between changes in an exogenous variable, such as…

Q: Will an economy with a high multiplier be more stable or less stable than an economy with a low…

A: In economical aspects, a multiplier extensively alludes to a monetary factor that, when expanded or…

Q: If the marginal propensity to save in an economy is 0.2, and the marginal propensity to import is…

A: The objective of the question is to calculate the multiplier in an economy given the marginal…

Q: suppose the government wishes to illuminate recessionary GAP of 100 billion and the  MPC is .75. How…

A: The multiplier shows the change in real GDP as a result of a change in the autonomous expenditure.…

Q: Suppose the government seeks to achieve a balanced budget by levying taxes of $50 billion and making…

A: If MPC=0.8 then  MPS=1-MPC MPS=1-0.8 MPS=0.2

Q: How does the MPC differ from the MPS?

A: Meaning of Marginal Propensity to Consume (MPC): The term marginal propensity to consume refers to…

Q: Use the following information on economy X to answer the questions below. Consumption function: C =…

A: Given Consumption function: C = 250 + 0.8YInvestment spending: I = 150Government spending: G =…

Q: If the MPC in an economy is 0.9, a $4 billion increase in government spending will ultimately…

A: MPC or Marginal Propensity to Consume measures the increase in spending with the increase in…

Q: Does MPC matter when using taxes to stimulate the economy in the short-run?

A: The stimulation of the economy using taxes involves fiscal policy. The expansionary/contractionary…

Q: It is 1979 and there is a sudden decline in oil supplies due to political turmoil in the Middle…

A: Monetary policy Monetary policy is the instrument of a central bank and monetary authority of the…

Q: What is the relationship between MPS and multiplie

A: In economics, savings refer to the amount that is kept aside by the people to use in an emergency or…

Q: The multiplier process can occur when a decrease in investment spending...

A: The multiplier process explains the vicious circle formed by the economic transaction.

Q: Using diagrams can you please show how the rise in the household saving rate can cause a fall in…

A: The IS curve is downwards sloping to the right which indicates to the fact that the rate of…

Q: Suppose that Shen, an economist from a research facility in Washington, and Valerie, another…

A: Economists are professionals who study and dissect economic frameworks, ways of behaving, and…

Q: If the MPS = 0.1, then the value of the spending multiplier equals?

A: MPS is the marginal propensity to save.  MPC is the marginal propensity to consume.  Multiplier is…

Q: Why Krugman believe that fiscal austerity in france or more generally in Europe would fail?

A: Fiscal austerity is used to define the steps or the direction taken by government which leads to…

Q: Sir John Mayard Keynes said that the only time a should be balanced is when the economy is at full…

A: Full employment refers to an economy in which all available labour resources are used most…

Q: If the MPC is 0.9 what will happen to GDP if the government cut spending bt $2.

A: ∆Y = 11-c∆G where Y = GDP            c = MPC            G = government spending

Q: Use what you have learned about the fiscal multiplier to explain why, in Krugman’s opinion, fiscal…

A: Introduction Paul Krugman is an American economist and Nobel Prize laureate who works at the…

Q: How to calculate the level of GDP base on the MPC & MPS? Historical durations of recessions? The…

A: Hi, As you have posted multiple questions, we will answer the first one as per our policy. KIndly…