Say, the expenditure multiplier for an economy is 2. An increase in government spending by $300 million will provide a million boost to the economy. ...... Select one: O a. $150 million. O b. $300 million O c. $600 million O d. $200 million.
Q: What would happen to multiplier if investment were to be positively related to income?
A: Hello. Since you have posted multiple questions and not specified which question needs to be solved,…
Q: If the simple spending multiplier is 8, the marginal propensity to consume is O a. 8 1/4 wered O c.…
A: The spending multiplier represents the change in the real gross domestic product or aggregate…
Q: The tax cuts of 2017 increased the 2018 disposable income of households by roughly $200 billion. If…
A: The marginal propensity to save (MPS) is the percentage of a household's additional income that is…
Q: Solve for equilibrium where: • NT = tY = 0.15Y • C = Co + cYD = 20 +0.8YD o lo = 100 o Go = 100…
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Q: If investment increases by $100 and, as a result, gross domestic product (GDP) ultimately increases…
A: Change in investment=$100 Change in GDP=$200
Q: The transfer payment multiplier is smaller than the expenditure multiplier by the: O a. Transfer…
A: When talking about the multiplier impact of transfer payment and expenditure, it can be said that…
Q: If the multiplier is 5 and government expenditures increase by $200 billic OA) AD shifts left by…
A: Note: “Since you have asked multiple questions, we will solve the first question for you. If you…
Q: Question 3 Given the following information: 1= 150, G = 150, T-150 and C = 150 +0.75(Yd) Which of…
A: Here, given information is, Investment (I): 150 Government spending (G): 150 Taxes (T): 150…
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A: The Income-Expenditure model was postulated by economist John Maynard Keynes in order to explain…
Q: e figure above: - Find the equilibrium GDP. What happens to the left of that equilibrium? What…
A: The equilibrium condition: Y = C+I+G.
Q: An increase in spending by $5 bilion will add OA drectly to isposable income by this amount and…
A: Increasing in government spending will increases the output and aggregate demand. when government…
Q: The the marginal propensity to import, the the multiplier. O larger; more negative O larger; larger…
A: Answer. Option C is correct Explanation movement along the supply curve will show changes only in…
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A: The multiplier refers to how much change in the injection in any economy increases the level of…
Q: A reduction in the tax rate might lead to an increase in the growth rate of potential output if... O…
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Q: When the general price level falls Selectione Oa. investment falls as a result of the real wealth…
A: The fall in the general price level leads to a change in the spending of the consumers which is…
Q: If the marginal propensity to consume is equal to 0.70 and income rises by $20 billion in an…
A: The marginal propensity to consume measures the change in consumption when there is a change in the…
Q: Assume that Equilibrium GDP is £4,000 billion. Potential GDP is £5,000 billion. The marginal…
A: Given Information Marginal propensity to consume (MPC) = 0.8Spending multiplier = 1/(1-MPC)…
Q: 34 64. If the marginal propensity to save (MPS) is small, O a. make the simple multiplier larger. O…
A: Multiplier =1/1-MPC or 1/MPS
Q: What is the effect of an increase in investment? When investment increases, O A. aggregate demand…
A: Investment is the part of aggregate demand.
Q: What are the two equivalent formulas for investment multiplier? O A. 1 and MPC 1- MPS OB. 1- MPC MPC…
A: We know that aggregate output in closed economy is given by Y = C+I+GWhere C =c+MPC×YSo Y=…
Q: certain percentage of it. That amount recirculates through the economy and adds additional income,…
A: A tax is a required expense or monetary charge demanded by any administration on an individual or an…
Q: 2. If a $580 billion initial increase in spending leads to a $10850 billion change in real GDP. how…
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Q: QUESTION 4 If an increase of $5 billion in investment is associated with an increase of $50 billion…
A: Multiplier: It is defined as the number of times by which the income increases due to an increase in…
Q: Which of the following statements are correct? Select one: O a. Households smooth their consumption…
A: In macroeconomics, the household sector consumes the final items created by the production sector.…
Q: An increase in the value of the simple multiplier can be caused by... O a. An increase in the net…
A: A simple multiplier broadly estimates the change in the economic output due to the change in the…
Q: 6. The multiplier effect Consider a hypothetical economy. Households spend $0.60 of each additional…
A: The multiplier can be calculated as follows: Multiplier=1MPS=10.4=2.5 Thus, the multiplier for…
Q: What is the formula for the marginal propensity to expend? A aggregate expenditures/A national…
A: The economies around the world tend to have various entities who work with the motive of maximizing…
Q: 2. Consider an economy that is characterised by the following set of equations: C = co+c¡Yp Yp = Y…
A: PLEASE FIND THE ANSWER BELOW.
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A: The aggregate demand and aggregate supply in the economy determine the macroeconomic equilibrium.…
Q: If investment increases by $200, and as a result GDP increases by $800, then the a) multiplier is…
A: Investments are injections to the economy. Increase in final GDP arising from a new injection is…
Q: LRAS SRAS P. AD $1000 $1200 Refer to Figure 34-11. Suppose the multiplier is 5 and the economy is…
A: Here, it is given that the economy is currently producing at point A and the potential output level…
Q: 3. A fall in the income tax rate will O lower the multiplier and lower equilibrium income. O raise…
A: Macroeconomics is a part of economics that deals with production, decision and allocation concerning…
Q: If the marginal propensity to consume is 0.8 and the government increases taxes by $1,000, the…
A: Answer (1) Given Information Marginal propensity to consume (MPC) is 0.8. And government…
Q: If, in an economy, a $200 billion increase in consumption spending creates $200 billion of new…
A: Marginal propensity to consume quantifies the induced consumption for every additional dollar of…
Q: Which of the following increases the size of the expenditure multiplier? a. a decrease in the…
A: Expenditure multiplier means how much times income will change due to change in expenditure . It…
Q: If taxes fall and government spending rises by the same amount, there is very little change in GDP.…
A: When the federal government spends more money than it receives in taxes in a given year, it runs a…
Q: Suppose that the government wants to increase real GDP in the short run. To accomplish this it…
A: Increase government expenditures ----- is correct
Q: What is equilibrium expenditure? How is equilibrium expenditure determined? Equilibrium expenditure…
A: We’ll answer the first question since the exact one wasn’t specified (numbering of questions is…
Q: Real GDP Consumption (dollars) expenditure (dollars) 10 22.5 20 30 30 37.5 40 45 50 52.5 60 60 LAS…
A: The aggregate demand (AD) shows the negative relationship between the real GDP and price level. The…
Q: The closed economy of Sokovia has a GDP of 150 billion dollars and a marginal propensity to save of…
A: Multiplier shows that how much of the countries GDP (Y) changes in response to change in the…
Q: If the multiplier is 5 and investment increases by $3 billion, equilibrium real GDP will increase…
A: We are given, Multiplier = 5 Increase in investment = $3 billion To find, increase in equilibrium…
Q: 3. For the following problem, assume that the MPC, b, takes into account how much consumers spend as…
A: The aggregate demand is the total demand of all the goods and services. The aggregate demand is the…
Q: EOC ЕОC 8.13 Explain why the multiplier effect of an increase in consumption spending of $100…
A: A multiplier is a term used in economics to describe an economic element that, when raised or…
Q: US President Collin Hawkins is concerned about the economy. He orders the Treasury to issue direct…
A: Answer: Citizens save 20% of their income. MPS marginal propensity to save=20%=0.2 (1).…
Q: Fill in the blanks with the number that corresponds to the correct word or phrase n the word bank 1.…
A: Disclaimer : as you posted multipart question we are supposed to solve only the first 3 as per the…
Q: Still with the same data on Macroland, a closed economy with no government sector, and with fixed…
A: Yd = Y - T (T denotes Tax.) Y = Yd + T. GDP Yd Y = Yd + T C = Y - Iplanned Iplanned Iunplanned…
Q: If people expected that a fiscal policy in the form of a tax cut was temporary, then this policy's…
A: This policy would be weaker because it would be temporary.
Q: Which of the following will shifts the SAS curve to the left? O A natural disaster. O An improvement…
A: The short-run aggregate supply curve is the curve that provides information about the total amount…
Q: Which of the following will NOT shift the ADTI curve? O a. A rise in government spending O b. A rise…
A: AD: Y= C+I+G+NX Y = National Income or output C= Consumption I = Investment G = Government Spending…
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- When government spending increases by $1, planned expenditures increase by $1 O A. times the spending multiplier and the equilibrium level of income will increase by $1. O B. and the equilibrium level of income will increase by $1. O C. and the equilibrium level of income will increase by $1 times the spending multiplier. O D. and the equilibrium level of income will increase by less than $1. When taxes are cut by $1, planned expenditures O A. decrease by $1 and the equilibrium level of income will decrease by $1 times the tax multiplier. O B. increase by less than $1 and the equilibrium level of income will increase by $1 times the tax multiplier. OC. increase by $1 and the equilibrium level of income will increase by S1 times the tax multiplier. O D. increase by $1 and the equilibrium level of income will increase by $1 times the spending multiplier. Click to select your answer! V560QUESTION 8 Which of these is positively related to the size of the multiplier? O a. The marginal propensity to consume O b. The marginal utility of money OC. The marginal tax propensity Od. The marginal propensity to saveb. Using the model from this chapter, explain the effect on GDP from an increase in G by $5 billion. An increase in spending by $5 billion will add A. directly to Eisposable income by this amount and cause an increase in national income equal to less than $5 billion due to the multiplier effect. O B. directly to aggregate demand by this amount and lead to an eventual change in national income equal to $5 billion times the simple multiplier. O C. indirectly to aggregate demand and cause an eventual change in national income equal to $5 billion. OD. indirectly to disposable income, only a fraction of which (determined by the MPC) will then be spent, ie. national income will change by less than $5 billion.
- Assume that taxes depend on income and the MPC is 0.8 and tis 0.4. An increase in taxes of $10 billion will decrease equilibrium income by Select one: O a. $15.4 billion. O b. $25 billion. O c. $19.2 billion. O d. $27 billion.Which of the following is INCORRECT? a. The multiplier dampens the increase in income that occurs during expansions and brings the economy to a new equilibrium GDP. O b. Firms experience unplanned decreases in inventories as expansions begin. C. Firms increase production in response to unplanned decreases in inventories. O d. Expansions usually begin with an increase in autonomous spending.QUESTION 47 An increase in the marginal propensity to consume (MPC) O a. increases the multiplier, so that changes in government spending have a larger effect on aggregate expenditure (aggregate demand). O b.increases the multiplier, so that changes in government spending have smaller effect on aggregate expenditure (aggregate demand). O c. decreases the multiplier, so that changes in government spending have a larger effect on aggregate expenditure (aggregate demand). O d. decreases the multiplier, so that changes in government spending have a smaller effect on aggregate expenditure (aggregate demand).
- What is the formula for the marginal propensity to expend? A aggregate expenditures/A national income O b. A autonomous expenditures/A national income O a. O c. A consumption/A national income O d. A national income/A induced expendituresSuppose that consumer spending initially rises by $5 billion for every 1 percent rise in household wealth and that investment spending initially rises by $20 billion for every 1 percentage point fall in the real interest rate. Also assume that the economy's multiplier is 3. Instructions: Enter your answers as a whole number. a. If household wealth falls by 6 percent because of declining house values, and the real interest rate falls by 3 percentage points, in what direction and by how much will the aggregate demand curve initially shift at each price level? Aggregate demand will initially shift (Click to select) V by $ billion. b. In what direction and by how much will it eventually shift? Aggregate demand will eventually shift (Click to select) ♥ by $ billion.By increasing the taxes by government, the value of consumption will increase. a. True O b. False
- Suppose that consumer spending initially rises by $5 billion for every 1 percent rise in household wealth and that investment spending initially rises by $20 billion for every 1 percentage point fall in the real interest rate. Also assume that the economy's multiplier is 4. Instructions: Enter your answers as a whole number. a. If household wealth falls by 6 percent because of declining house values, and the real interest rate falls by 3 percentage points, in what direction and by how much will the aggregate demand curve initially shift at each price level? Aggregate demand will initially shift rightward v by $ |billion. b. In what direction and by how much will it eventually shift? Aggregate demand will eventually shift rightward by $ billion.An increase in the value of the simple multiplier can be caused by... O a. An increase in the net tax rate. O b. A decrease in the net tax rate. O c. An increase in the marginal propensity to save. O d. A decrease in the marginal propensity to consume. O e. An increase in the marginal propensity to import. Clear my choiceFigure 8-23. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. 6 on4m21 3 Tax Revenue B Tax Size Refer to Figure 8-23. If the economy is at point A on the curve, then a small increase in the tax rate will O increase the deadweight loss of the tax and increase tax revenue. O increase the deadweight loss of the tax and decrease tax revenue. decrease the deadweight loss of the tax and increase tax revenue. O decrease the deadweight loss of the tax and decrease tax revenue.