In Keynesian economic theory, a recessionary gap causes a depletion of inventories. occurs if total output is less than aggregate demand. is the amount by which the rate of actual spending falls short of full-employment GDP. is the amount by which the rate of actual spending exceeds full-employment GDP.

Q: Assume the economy is currently experiencing a 100 billion-dollar recessionary gap. Furthermore,…

A: For finding the change in taxes, tax multiplier needs to be determined.  Tax multiplier= MPC/(1-MPC)…

Q: Suppose the marginal propensity to consume (MPC) is either 0.75, 0.96, or 0.62.   a. For each…

A: GDP shows total market value that produced within a country in a specific time period .GDP is used…

Q: Find national income from the following  Autonomous consumption $100 Marginal propensity to consume…

A: According to question we are given Autonomus consumption =$100 Marginal propensity to consume =$0.60…

Q: According to Keynes's Consumption function,     a) Consumption spending is a function of…

A: Marginal Propensity to Consume (MPC): The proportion of additional income that a consumer will spend…

Q: If the average marginal propensity to consume is 0.8, then a $10 million increase in total income…

A: The average marginal propensity to consume (MPC) is the fraction of additional income that an…

Q: he aggregate demand multiplier effect says that an initial increase in expenditure plans leads to an…

A: Multiplier means initial rise in the expenditure by the government leads to multiple rise in the…

Q: When the price level falls     A)  the slope of the aggregate expenditures curve changes.   B)  the…

A: Aggregate expenditure is the sum of consumption, investment, government spending and net exports.

Q: An increase of $200 million In investment leads to a rise in national income by $1000 million. Find…

A: The information given is as follows:- Change in investment = $200 million Change in national income…

Q: Use the Keynesian cross to predict the impact on equilibrium GDP of the following. In each case,…

A: The Keynesian Cross is a graphical representation of the planned expenditure function and actual…

Q: It is assumed that everything else stays constant.  The economy has Consumption $90, Investment…

A: Aggregate Demand has four components, namely,  Private consumption expenditure( C)  Private…

Q: If unplanned change in inventory is zero    aggregate output is positive when planned aggregate…

A: The equilibrium level of real gross domestic product, or GDP, as determined by the…

Q: Assume that the level of autonomous consumption in an economy equals 400, the level of planned…

A: Given information The autonomous consumption is 400 Planned investment (I) is 200 MPC = 0.6…

Q: According to Keynes’ Law... Group of answer choices The total demand tends to rise above the total…

A: Keynesian economics is highly significant to explain the nature of a market using a specfiic…

Q: Assume the current equilibrium level of income is $200 billion as compared to the full-employment…

A: The objective of the question is to find out the change in aggregate expenditures needed to achieve…

Q: Suppose the marginal propensity to consume is 0.75, the marginal propensity to import is 0.25, there…

A: Aggregate expenditure is the sum of all spending made by all sector of the economy.  It includes…

Q: Given that autonomous spending is 100 billion, disposible income is 20 billion, and marginal…

A: C = a + bY Where C= Consumption expenditure in aggregate             a= Autonomous consumption…

Q: nge in inventories. an unplanned

A: In Aggregate Expenditure model, if Real output is less than planned aggregate expenditure then there…

Q: Suppose that current income (Y) is 200,000, income in the previous period (Yt-1) is 170,000,…

A: The concept of permanent income relates to the amount of money someone will earn on average over a…

Q: ⁢42billion, and spending on imports was $35$⁢35 billion. The price level increases, resulting in a…

A: Given : Consumption spending = $150 billion Investment Spending=$40 billion Government spending=$50…

Q: Explain the effect of an increase in exports on the equilibrium GDP in the Keynesian…

A: An economy is supposed to be at its balance level of pay when total inventory and total interest…

Q: The ________ illustrates the relationship between the price level and the quantity of planned…

A: a) aggregate demand curvethe aggregate demand (AD) curve is a curve representing the relationship of…

Q: The amount by which equilibrium real GDP exceeds full-employment GDP is known as (2pts) Question 12…

A: The amount by which equilibrium real GDP exceeds full-employment GDP is known a ____________________

Q: he marginal propensity to consume (mpc) is 0.8. In addition, government spending increases by $200…

A: The marginal propensity to consume is 0.8=> MPC =…

Q: A rise in interest rate.

A:

Q: 20. In the Keynesian model, a fall in the interest rate will shift the aggregate expenditure line…

A: Keynesian economics refers to the macroeconomic theory that shows the total spending for the economy…

Q: If an increase in aggregate expenditures results in no increase in real GDP we can surmise that the:…

A: Real Gross Domestic Product (GDP) is a measure of the value of all goods and services produced…

Q: An economy experiences an MPC of 0.75. Interest rates rise in the economy causing initial change(s)…

A: The multiplier is a measure of how much a change in an initial economic stimulus (such as spending…

Q: Suppose that the marginal propensity to save is   dS dy = 0.21     (in billions of dollars) and…

A: Consumption function, in financial aspects, the connection between consumer spending(s) and the…

Q: Refer to Figure 22-2. What is the marginal propensity to spend (z) in this economy? Select one: O A.…

A: Given,marginal propensity to consume = 0.75net tax rate=0.20

Q: The marginal propensity to consume is  a)the average amount of income that is consumed or spent…

A: The measure that depicts in an economy the sensitivity of level of income to the changes occurring…

Q: An inflationary gap is the amount by which aggregate expenditures ____ the amount required to…

A: Inflationary gap refers to the situation when current level of output (current GDP) exceeds…

Q: The consumption function macroeconomics is often written as C= a + b(Y-T) where b expresses:   a.…

A: Meaning of Macroeconomics: The term macroeconomics refers to the situation of economic and…

Q: Troll Island is a small island nation that recently experienced an autonomous change in aggregate…

A: Marginal Propensity to Consume (MPC): It refers to the proportion of income that is spent on…

Q: If consumption is $5 billion when disposable income is $0, and if the marginal propensity to consume…

A: Answer- Need to find- C(y)  Given in the question- Consumption = $5 Billion  Marginal propensity to…

Q: When disposable income increases, consumption expenditure decreases by the same amount. does not…

A: Disposable income (sometimes known as disposable personal income) is the amount of money available…

Q: The total expenditure schedule in Macroland begins with these initial levels (in billions of…

A:

Q: Suppose that equilibrium output in a closed economy is 1,680, consumption 1,260 and investment is…

A: In Keynesian macroeconomics, aggregate demand plays a major role because according to Keynesian…

Q: Suppose autonomous consumption in an economy is $3 trillion, the MPC is 0.8, government spending is…

A: As proved after World War II, Keynesianism has made progress in its capacity to overcome economic…

Q: The Keynesian cross 45 degree line represents: Every point where aggregate expenditure is equal to…

A: The Keynesian model is a framework that emphasizes the role of aggregate demand in influencing…

Q: An economy’s aggregate demand is specified as follows: C = 300 + 0.8Yd, Investment (Io) = 230,…

A: The equilibrium national income occurs when the planned aggregate expenditure (AE) is equal to…