In each of the following cases, calculate the values of MPC, MPW, and the spending multiplier. Enter your responses below rounded to 2 decimal places. a. A $7 million increase in income leads to a $1,750,000 rise in consumption on domestic items. MPC is therefore and the spending multiplier is MPW is b. A $9 million decrease in income results in a $0.9 million drop in consumption on domestic items. MPC is therefore , MPW is and the spending multiplier is c. A $5 million decrease in income causes a $4.5 million drop in withdrawals. MPC is therefore spending multiplier is MPW is and the

In each of the following cases, calculate the values of MPC, MPW, and the spending multiplier. Enter your responses below rounded to 2 decimal places. a. A $7 million increase in income leads to a $1,750,000 rise in consumption on domestic items. MPC is therefore and the spending multiplier is MPW is b. A $9 million decrease in income results in a $0.9 million drop in consumption on domestic items. MPC is therefore , MPW is and the spending multiplier is c. A $5 million decrease in income causes a $4.5 million drop in withdrawals. MPC is therefore spending multiplier is MPW is and the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Suppose now that country's national income increases to $35 billion. Assuming the amount paid in taxes is fixed at $12 billion and MPC = 0.7, what will be the new household consumption? $22.3 billion $21.6 billion $23.7 billion $19.5 billion
7. The consumption function Consider a country with the national income of $11 billion, the amount of taxes paid by households of $3 bilion, and household consumption of $7 billion. Suppose that the marginal propensity to consume (MPC) is 0.75. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. Note: Select and drag the line segment from the palette to the graph. Then select a point on the line segment and drag it to its desired position. CONSUMPTION (Bons of dollars) u) 18 10 12 10 4 6 16. 12 14 14 DISPOSABLE INCOME (ons of dollars) 18 M Consumption Function
Answer both I will upvote
The Italian government decides to stimulate the economy by sending checks worth $70 billion to Italian consumers. If the government spending multiplier is 1.5 , calculate the MPC to determine the final change in Italy's real GDP due to the transfer. Please give your answer as a whole number in billions of dollars. $ billion The Greek government decides to introduce new austerity measures, which reduce government direct spending by $16 billion. Greece has a marginal propensity to consume of 0.6 . What will be the final change in real GDP as a result of this decreased spending? Please give your answer as a whole number in billions of dollars. The Japanese government decides to stimulate the economy by increasing direct spending by $70 billion. If the final change in real GDP is $280 billion, what is Japanese consumers' marginal propensity to consume (MPC)? Please round your answer to two decimal places
a)What will the multiplier be given the MPS values below? Fill in the table with your answers. Instructions: round your answers to 2 decimal places. MPS Multiplier 0.0 0.4 0.5 1.0 b) What will the multiplier be given the MPC values below? Fill in the table with your anwers. MPC Multiplier 1.0 0.9 0.75 0.5 0 c) How much of a change in GDP will result if firms increase their level of investment by $ 8 billion and the MPC is 0.80? ( Enter your answers as whole numbers) How much of a change in GDP will result if firms incresese their level of investment by $ 8 billion and the MPC instead is 0.67?
Suppose an initial increase in government spending (G) increased GDP by $50,000. If he simple spending multiplier is 2.5, the size of the initial government spending was
Consider two nations, Spendia and Savia. The MPC for Spendia is 0.8, and the MPC for Savia is 0.5. Assume that both nations experience an increase in gross investment (1) of $150 million at their existing GDP levels. Instructions: In part a, enter your answers for changes in income as a whole number and multiplier answers to 2 decimal places. In part b, round your answers to 2 decimal places. a. Considering the multiplier effect, what will be the overall increase in income (Y) for each nation? The increase in income for Spendia is $ 100 million, describing an expenditures multiplier of The increase in income for Savia is $ 100 million, describing an expenditures multiplier of b. Now assume that a third nation experiences an increase of $375 million in its income and its gross investment (I) increases by the same amount as Spendia and Savia, which is $150 million. The expenditures multiplier of this third nation is suggesting an MPC of 0.45
Calculate MPC, MPS and the Multiplier if consumption expenditure increases by $4,000 as a result of increase in income from $40,000 to $46,000.
An economy is characterized by the following desired consumption and investment functions: C = 543 + 0.72Y and I = 752. Part (a): Calculate the equilibrium level of GDP and the multiplier for this economy. Round your answer for the multiplier to 3 decimal places. Example: 0.001 Part (b): Suppose the level of desired investment changed to I = 731, with no change to desired consumption. What is the new equilibrium GDP level for the economy? Part (c): Using 1 to 2 sentences, describe how this change to desired investment affects the AE function graphically. Part (d): Suppose the desired investment levels returns to I = 752, but now consumers spend 86 cents of every dollar earned. What is the new equilibrium GDP level for the economy? Part (e): Using 1 to 2 sentences, describe how this change to consumption habits affects the AE function graphically.
The simple economy of Altria shown in the table below has no government or taxes and no international trade. Its investment is autonomous and its MPC is constant. a. Complete the table below. Remember to use a minus (-) sign to indicate negative values. Y S I AE 200 0 400 800 1,200 1,600 2,000 с 200 500 0 300 b. The value of expenditures equilibrium is $ c. The value of the multiplier is
Calculate multiplier if MPC is 0.77
Calculate the value of multiplier if change in income is $1100 million and the change in investment is $350 million