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- Increasing government purchases of goods and services would have a bigger multiplier effect on real GDP than decreasing taxes, dollar for dollar. Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a b True False18. If MPC = 0.65, find the government spending multiplier. If government spending increases by 100, what will be the change in Y? Will Y increase or decrease? What will be the new Y (Y2) if you are given that Y1 is 500?Assume an economy in which:(i) there are no exports and no imports,(ii) investors always want to spend $200 billion, or I = 200,(iii) government spends $500 billion and tax revenue is $200 billion,(iv) consumption is a linear function of disposable income, C=100+0.8Yd Assume that the government eliminates taxes while keeping governmentspending the same. (Thus T = 0 and G = 500.) The economy’s consumption function andinvestment remain unchanged. What is the new equilibrium level of national income?
- Suppose that an initial $ 10 billion increase in investment spending expands GDP by $ 10 billion in the first round of the multiplier process. Also suppose that GDP and consumption both rise by $ 6 billion in the second round of the process. Instructions: In parts a and b, round your answers to 1 decimal place. In part c enter your answer as a whole number. A) What is the MPC in this economy? B) What is the size of the multiplier? C) If, instead, GDP and consumption both rose by $ 8 billion in the second round, what would have been the size of the multiplier?Suppose that the marginal propensity to consume is 0.75. If the government decreases spending by Ksh 500 billion, what is the change in output? If the government decreases taxes by Ksh 500 billion, what is the change in (ii) output? If the government decreases transfer payments by ksh 500 billion, what is the change in output If the government decreases spending by ksh 500 billion and at the same time decreases taxes by ksh 500 billion, what is the change in output?In an economy, consumers spend 800 million regardless of their level of disposable income. In addition, they spend 75% of their yearly disposable income. * Investment is fixed at 250 million, Gvt expenditures are 120 million, net taxes are 100 million, exports are 170 million. Imports are 15% of the level of disposable income. Q, what is this economies equilibrium level of output Q how much would net export be when this economy is at equilibrium output
- If consumption is C=100+0.75Yd Taxes is T=50+0.5Y Export is X=200 Import is M=50+0.25Y Government spending is G=150 Investment is I=200. Y is domestic income and Y is private disposable income. Determine the value of the economy's multiplayer which is applicable to government spending and interpret it.i need this in word not handwritten Q7. Assume that in 2015, the following prevails in the Republic of Nurd: Y = $200 G = $0 C = $160 T = $0 S = $40 I (planned) = $30 Assume that households consume 80 percent of their in- come, they save 20 percent of their income, MPC = 0.8, and MPS = 0.2. That is, C = 0.8Yd and S = 0.2Yd. Is the economy of Nurd in equilibrium? What is Nurd’s equilibrium level of income? What is likely to happen in the coming months if the government takes no action? 2. If $200 is the “full-employment” level of Y, what fiscal policy might the government follow if its goal is full employment? 3. If the full-employment level of Y is $250, what fiscal policy might the government follow? 4. Suppose Y = $200, C = $160, S = $40, and I = $40. Is Nurd’s economy in equilibrium? 5. Starting with the situation in part d, suppose the government starts spending $30 each year with no taxation and continues to spend $30 every period. If I remains constant, what…Assuming there is no government or foreign sector, if the multiplier is 5, the MPC is Select one: a. 0.4. b. 5. C. 0.8. d. 0.5.
- 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 500 0 750 1,500 2,250 3,000 3,750 с 500 1,000 0 750 b. The value of expenditures equilibrium is $ c. The value of the multiplier isAssume an economy in which:(i) there are no exports and no imports,(ii) investors always want to spend $200 billion, or I = 200,(iii) government spends $500 billion and tax revenue is $200 billion,(iv) consumption is a linear function of disposable income, C=100+0.8Yd Assume instead that the government wishes to maintain taxes at $200 billion(T=200), but wants to achieve an equilibrium level of national income of $4200 billion(Y=4200) by increasing government spending. To achieve this result, by how much mustgovernment spending increase?Suppose the MPC = 0.6? What will be the government spending multiplier? If, in this economy, government spending (G) increases by $300, what will happen to Total Spending? Show your work