Income is 678 Trillion and consumption is 662 Trillion then income increases to 698 Trillion and consumption increases to 677 Trillion. What will the marginal propensity to consume be? .8 Using the information and the calculations from question seven what will the multiplier be4 Using the information and the calculations from questions seven and eight and given a full employment level of aggregate expenditure GDP of 600 and a current level of aggregate expenditure of 560 how much would government spending have to change to regain the full employment level of GDPIncrease in government spending of 8Decrease in government spending of 8Increase in government spending of 10Decrease in government spending of 10None of the above Using the information and calculations form questions seven, eight, and nine how much would government taxes have to change by in order to regain the full employment level of GDPIncrease taxes by 8Lower taxes by 8Increase taxes by 10Lower taxes by 10None of the above

Answered: Income is 678 Trillion and consumption…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Income is 678 Trillion and consumption is 662 Trillion then income increases to 698 Trillion and consumption increases to 677 Trillion. What will the marginal propensity to consume be?

Using the information and the calculations from question seven what will the multiplier be

Using the information and the calculations from questions seven and eight and given a full employment level of aggregate expenditure GDP of 600 and a current level of aggregate expenditure of 560 how much would government spending have to change to regain the full employment level of GDP

Increase in government spending of 8
Decrease in government spending of 8
Increase in government spending of 10
Decrease in government spending of 10
None of the above

Using the information and calculations form questions seven, eight, and nine how much would government taxes have to change by in order to regain the full employment level of GDP

Increase taxes by 8
Lower taxes by 8
Increase taxes by 10
Lower taxes by 10
None of the above

Expert Solution

Step 1

Marginal propensity to consume (MPC) refers to the level of additional consumption expenditure due to increase one more unit of income.

Step 2

Marginal propensity to consume can be calculated as follows.

MPC is 0.75.

Multiplier is 4 (1/(1-0.75)).

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