Refer to the Table. The government spending multiplier in this economy isPlannedOutput(Income) Taves Consumption Savings Investment1000L100NetPlanned2006801202002001402002001,200200200200840160130014001.500920200200200LORO20016001,1602402.4.5.10.

Government Spending Multiplier = 11-MPC or 1MPS where MPC is the marginal propensity to consume MPS…

Refer to the Table. The government spending multiplier in this economy is Planned Output Net (Income Tases Consumption Savings InvestmentSpending 1000 Planned Govermment 200 680 120 200 200 200 140 200 L100 1200 540 160 200 200 1.300 920 200 200 200 200 200 200 1400 200 200 1500 LORO 200 1,160 240 200 O 2. O5. O 10.

Refer to the Table. The government spending multiplier in this economy is Planned Output Net (Income Tases Consumption Savings InvestmentSpending 1000 Planned Govermment 200 680 120 200 200 200 140 200 L100 1200 540 160 200 200 1.300 920 200 200 200 200 200 200 1400 200 200 1500 LORO 200 1,160 240 200 O 2. O5. O 10.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The ratio of all levels of government spending to GDP in the United States is about percent. 40 50 O 70 O 10 - 20
According to the text, a "multiplier" is used as an assessment and evaluation tool for several reasons. Which of the following is NOT a reason for using a multiplier? Seleet one: O 1. A multiplier represents the amount of times one dollar will be spent before it leaks out into the cconomy. O 2. A multiplier is used to assess overall return on investment for one dollar spent. 3. A multiplier is used to discount a future expenditure in terms of current dollars that needs to he spent. O 4. A multiplier is used to evaluute the effectiveness of one event or property compured to another.
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Problem 3 Given the below data Disposable Income Consumption expenditure (dollars) 0. 100 100 180 200 260 300 340 400 420 500 500
Which of the following changes in personal income tax would lead to the smallest increase in consumption? O a. O b. a $15 000 decrease in taxes, if MPC equals 0.6 O c. a $30 000 decrease in taxes, if MPC equals 0.25 Oe. a $20 000 decrease in taxes, if MPC equals 0.5 O d. a $12 000 decrease in taxes, if MPC equals 0.75 a $10 000 decrease in taxes, if MPC equals 0.2
2. If disposable income is 4130, consumption is 2400, government spending is 431, and total taxes are 911, national saving is then equal to O 3650 O 3219 O 2210 O 819
Real GDP Consumption (dollars) expenditure (dollars) 10 22.5 20 30 30 37.5 40 45 50 52.5 60 60 2 LAS 160 * SAS 150 140 130 120 AD 4 8 12 16 20 24 Real GDP (trillions of 2000 dollars) In the above table and figure, supposed that there is no import or proportional tax. To pull the economy back to the long-run equilibrium, the government can conduct a balanced budget operation by spending $ trillion. O 1) 1 O 2) 2 O 3) 4 4) 8 el (GDP deflator, 2000 = 100) Co
Problem 1 The various expenditure categories within the economy are: C = 600+ 0.8Yd | = 800 G = 600 NX = 0 T= 700 Refer to problem 1. Equilibrium Real GDP is O 7200 O 4200 O 1800 O 5500
Suppose that the level of GDP increased by $100 billion in an economy where the marginal propensity to consume is 0.5. The initial change in spending must have been: O $5 billion O $100 billion O $50 billion O $500 billion
d Sites O Web Slice Gallery If real GDP is $13 trillion and planned aggregate expenditure is $13.5 trillion, inventories will be * Below their target and real GDP will increase Below their target and real GDP will decrease Above their target and real GDP will decrease Above their target and real GDP will increase If a $75 billion increase in autonomous expenditure increases equilibrium expenditure by $150 billion, then the multiplier is 0.625 O 2
Suppose that Amazon decides to spend $10 million on a new distribution center. If the marginal propensity to consume is .8. then how much will GDP go up by once the multiplier process has played out? O $10 million O $20 million O $40 milion O $50 million
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