There is an increase in government expenditures financed by taxes and its overall short-run effect on output is larger than the change in government spending.  Which of the following is correct?

Q: MPC = .75   What is the value of the multiplier?

A: MPC=0.75 MPS=1-0.75         =0.25

Q: Consider an economy with an autonomous consumption of $4 million, a marginal propensity to consume…

A: According to neoclassical economists, the ultimate goal of economic activity is consumption, so, per…

Q: Consider an economy in which all taxes are autonomous and the follov us consumption, planned…

A: Disclaimer “Since you have asked multiple questions, we will solve the first question for you. If…

Q: Suppose that the government grants investment tax credits without changing the overall tax revenue…

A: Credits can reduce taxes paid directly to the government by taxpayers. A tax credit is different…

Q: I have answered a through d. please answer the rest. Assume in Fantastic land, MPC = 0.75, and…

A: As per guidelines, we will answer the three subpart question. e. The expenditure multiplier can be…

Q: Given the following information, answer the question. Autonomous consumption = R100 million…

A: It is given that,autonomous consumption is R 100 million.Investment spending = R 300…

Q: It is assumed that everything else stays constant.  The economy has Consumption $90, Investment…

A: Aggregate Demand has four components, namely,  Private consumption expenditure( C)  Private…

Q: As a result of this policy, the equilibrium interest rate    .   Which of the following statements…

A: In economics, the aforeknown term is associated with the debt incurred by a country's government to…

Q: Which of the following statements is true?

A: Government spending refers to the amount of expenditure carried out by the government on the…

Q: Consider two economies, A and B. Economy A has a marginal propensity to consume of 0.9, a net tax…

A: In economics, the marginal propensity to consume (MPC) is defined as the proportion of an aggregate…

Q: part 1. A government runs the budget at government spending G=8 and income tax T=7. The NX=0. The…

A: Given information G=8 T=7 NX=0 I=5 Autonomous consumption=3 MPC=0.6 AD=C+I+G+X-M

Q: Which of the following policies can the government implement to stimulate investment? Group of…

A: Investment(I) indicates the spending on services and items, capital(K), and financial assets by…

Q: 0*Y+ 100 0*Y+ 80 0*Y+ 80

A: Given that, MPS is 0.80 Autonomous consumer spending is 100, We have to calculate aggregate…

Q: Explain and diagrammatically represent the shift in the DLF curve as a result of each of the…

A: “Since you have posted multiple questions, we will provide the solution only to the first question…

Q: You are given the following data concerning Freedonia, a legendary country: • Consumption function:…

A: The MPC (Marginal Propensity to Consume) is the change in consumption for a change in income. In…

Q: An economy is operating with an output that is $600 billion dollars above its natural rate of $2400…

A: The marginal propensity to consume is a metric that quantifies induced consumption, the concept…

Q: Consider an economy in which autonomous consumption, planned autonomous investment, autonomous…

A: Given, Autonomous consumer spending =$3,000  Investment = Ip = $5,000 Government spending = G =…

Q: Question 17 – Question 20: In this question, interest rate and prices are held fixed, and the…

A: Goods market is in equilibrium when aggregate demand and aggregate supply are equal. Where AD has…

Q: Pundits have stated that the recent tax cut mainly benefits companies. The benefit to companies can…

A: Lower tax rates increase the spending power of consumers and may increase aggregate demand,…

Q: The government spending multiplier is: A) Always bigger than the investment multiplier B) Always…

A: Government expenditure refers to the total expenditure incurred through the authorities in a…

Q: 3. If the Marginal Propensity to Save (MPS) is the following function of income: Y = 0.3- 0.1 Y 1/2…

A: Given: MPS being the function of income: Y=0.3-0.1Y-1/2 When income=$81, Savings=0 To find: Savings…

Q: The collective market capitalization of stock in American companies increased from $34 trillion at…

A: Answer: The market capitalization of stock at the end of 2019 = $34 trillion The market…

Q: The consumption function macroeconomics is often written as C= a + b(Y-T) where b expresses:   a.…

A: Meaning of Macroeconomics: The term macroeconomics refers to the situation of economic and…

Q: Assume a model with an income tax rate of t = 0.25 and a marginal propensity to consume of c = 0.8.…

A: Given the tax rate(t) as 0.25 and the Marginal propensity to Consume(c) as 0.8. One can calculate…