The multiplier process depicted in the following table is based on an MPC of 0.75.a. Recompute the first four cycles using an MPC of 0.95.MPC = 0.75MPC = 0.95SpendingCyclesChange in Spending Cumulative Increase Change in Spending Cumulative Increaseduring Cyclein Spendingduring Cyclein Spending(billions per year)(billions per year)(billions per year)(billions per year)1$100.00$100.00$100.00275.00175.0056.25231.25442.18273.44b. Given that the MPC is higher, how much moreconsumption occurs in the first four cycles when the MPC =0.95 as compared to when the MPC = 0.75?billionc. What is the value of the multiplier(i) if the MPC = 0.75?(ii) if the MPC = 0.95?

Given, OPTION-1- MPC= 0.75 OPTION-2-MPC=0.95

Answered: The multiplier process depicted in the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Calculate the value of multiplier if change in income is $1100 million and the change in investment is $350 million
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O Use the information in the following table to do exercises 8-15: 948 Y C $120 $300 $480 $700 sin $660 $100 $300 $500 JAZI I $20 $20 $20 $20 G $30 $30 $30 $30 X $10 -$10 -$30 -$50 1
An Economy has no imports or taxes, the MPC is 0.90 and real GDP is $12 trillion. If businesses increase investment by $0.1 trillion: 1. Calculate the multiplier? 2. Calculate the change in real GDP? 3. Calculate the new level of real GDP?
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1.12 Study the following diagram and answer the question that follows. Expenditures (billions of dollars per year) > > 3500 3000 2500 2000 1500 1000 500 Figure 9.1 500 1000 1500 2000 2500 3000 3500 Income (billions of dollars per yazari At an income level of $2,000 billion, a) Consumption equals $1,500 billion. b) Saving equals $0. c) The MPC equals 0.80. d) There is dissaving. F 뉴 C connex
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5:06 A & & & P M Page 4 of 5 QUESTION 4 The figure below shows the planned Aggregate Expenditure function for a hypothetical economy (AEp = 1,000 + 0.5 * Y). In this economy, taxes and transfers are equal to zero, so YD =Y. What is the value of unplanned investment expenditure (Iµ) when GDP = 3,000? Suppose that, next period, autonomous consumption increased by 100 and every thing else remained the same. Under these new circumstances, what would the value of unplanned investment be when GDP = 3,000? 5,000 4, 500 4, 000 3, 500 3,000 AEp = 1,000 + 0.5*Y 2, 500 2000 1, 500 1,a00 500 500 1,000 1, 500 2,000 2 500 3,000 3,500 4,000 4,500 5,000 REAL GDP Page 5 of 5 QUESTION A5 a. Suppose that some kind of significant economic event has occurred, and you learn that the event will de finitely cause the aggregate price level to decrease, but that its effect on short-run equilibrium real GDP cannot be determined without knowing the exact PLANNED AGGREGATE EXPENDITURE
give answer woith explaantion
THE AGGREGATE EXPENDITURE MODEL (IN THE SHORT RUN)YOU MUST SHOW YOUR CALCULATIONS IN THE SPACE BELOWFOR THE NEXT PROBLEM USE THE FOLLOWING FORMULA:CHANGE IN GDP = [ 1 / (1-MPC) ] * CHANGE IN GInitially, the economy is producing $13 trillion in goods and services and the government is spending $2 trillion.Then the government decides to increase its spending to $2.7 trillion. What is the value of the spending multiplier?

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