Refer to Table 24.6. The value of the government spending multiplierA. is 10.B. is 5.C. is 0.9.D. cannot be determined from the available information. ### Economic Data TableThis table provides comprehensive data related to Output (Income), Net Taxes, Consumption Spending, Savings, Planned Investment Purchases, and Government Spending. The table is designed for students to understand the relationships between these economic variables.#### Table Columns and Values- **Output (Income)**: The total income or production output of the economy. It ranges from 2,400 to 3,800 in increments of 200.- **Net Taxes**: A fixed amount of taxes subtracted from the income, which is consistently 100 across all levels of Output.- **Consumption Spending**: The amount of income spent by consumers, based on the consumption function $ C = 100 + 0.9Yd $. Where $ Yd $ is disposable income $ Y $ (Income) minus Net Taxes. - For example, at an Output of 2,400, $ Yd = 2300 $, so Consumption $ C = 100 + 0.9 \times 2300 = 2170 $.- **Savings**: The portion of income that is saved. This is calculated implicitly as the difference between disposable income and consumption spending. - Savings for an Output of 2,400 is: $ 2400 - 100 - 2170 = 130 $ - **Planned Investment Purchases**: A fixed amount set at 130 across all income levels.- **Government Spending**: An additional expenditure role taken by the government, fixed at 200 for all income levels.#### Detailed Breakdown of Table Data1. **Output (Income): 2,400** - Net Taxes: 100 - Consumption Spending: 2,170 - Savings: 130 - Planned Investment Purchases: 130 - Government Spending: 2002. **Output (Income): 2,800** - Net Taxes: 100 - Consumption Spending: 2,530 - Savings: 170 - Planned Investment Purchases: 130 - Government Spending: 2003. **Output (Income): 3,000** - Net Taxes: 100 - Consumption Spending: 2,710 - Savings: 190 - Planned Investment Purchases: 130 - Government Spending: 2004. **Output (Income): 3

The spending multiplier in economics refers to the concept that an initial increase in spending can…

Answered: Refer to Table 24.6. The value of the…

Refer to Table 24.6. The value of the government spending multiplier A. is 10. B. is 5. C. is 0.9. D. cannot be determined from the available information.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose that the government allocates $1 billion for new roads. It also raises taxes by $1 billion to keep the deficit from growing. The absolute value of the government purchase multiplier is 3.33 and that of the tax multiplier is 2.33. What is the effect on equilibrium GDP? GDP does not change. ● GDP increases by $ 2.33 billion. GDP increases by $3.33 billion ⒸGDP increases by $1 billion.
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Fill in the blanks: _______________ ___________ = income received but no goods are produced in exchange. ________________, ____________________, and durable goods are the three categories of Consumption Expenditures. ______________ Domestic Product = GDP minus depreciation.
What is the value of the sensitivity money demand to the level of income? O a. 25 O b. 0.50 O c. 50 O d. 0.65 What is the value of the nominal supply? O a. 500 O b. 1000 O c. 1000/2 O d. 2 Which of the following is an expression representing the IS curve O a. 0.65Y = 2325 - 50i O b. 0.65Y = 2325 + 50i O c. 0.50Y = 500 + 25i O d. 0.35Y = 2325 - 50i
- If personal income taxes are increased, disposable income and consumption increase. stay the same. decrease. change in an unpredictable direction
Consider the following NIPA data for 1Q2021 (First Quarter 20210 $ billlion) Investment: Non Residential $2,948.3 Exports $2,305.3 PCE Goods $5,183.5 Investment: Residential $1,043.7 Government Expendiures Federal $1,557.0 PCE Services $9,857.7 Imports $3,152.3 Governemnt Expenditures : State and local Goernent Expenditures $2,395.9 Change in private inventories -$90.1 1. Write the formula for GDP Compute the following: 2. Personal Consumption Expenditures (PCE): 3. Gross Private Domestic Investment (GPDI) 4. Net Exports (NX) 5. Government Expenditures (GOV) 6. GDP
Consider the following NIPA data for 1Q2021 (First Quarter 20210 $ billlion) Investment: Non Residential $2,948.3 Exports $2,305.3 PCE Goods $5,183.5 Investment: Residential $1,043.7 Government Expendiures Federal $1,557.0 PCE Services $9,857.7 Imports $3,152.3 Governemnt Expenditures : State and local Goernent Expenditures $2,395.9 Change in private inventories -$90.1 2a. Compute the weights of each of PCE, GPDI, NX and GOV) in GDP 2b. Consider the following rates of change (%) for each of the above items. % change PCE 10.70% GPDI -5.00% NX -6.80% GOV 6.30%
Problems 3. Draw the graph and label correctly Assume a simple closed economy, with an mpc equal to 0.75. The government has passed a balanced budget amendment. The economy goes into a recession, so the government increases government spending by 40 million to try to expand the economy. a. Calculate the change in output (AY) from the increase in government spending (AG). b. The balanced budget amendment requires the government to also raise taxes by 40 million. Calculate change in output (AY) from the tax hike.
The classification of government spending as an investment or having an investment-effect depends on: a. How the spending affects current consumption. b. How the spending affects future productivity. c. How the spending affects current stock prices. d. How the spending affects future stock prices.
1. The government expenditure multiplier is the effect of a change in government expenditure (G) on goods and services: a. An increase in aggregate expenditure increases aggregate demand (AD), which increases real GDP, which induces an increase in consumption expenditure (C), and which further increases aggregate demand (AD). b. An increase in aggregate expenditure increases aggregate supply (AS), which increases real GDP, which induces an increase in consumption expenditure (C), and which further increases aggregate supply (AS). c. An increase in aggregate expenditure decreases aggregate demand (AD), which decreases real GDP, which induces an decrease in consumption expenditure (C), and which further decreases aggregate demand (AD). d. An increase in aggregate expenditure decreases aggregate supply (AS), which decreases real GDP, which induces an decrease in consumption expenditure (C), and which further decreases aggregate supply (AS). 2. How do banks create money? Group of…
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