Use the table below to calculate the MPC, MPS, government spending multiplier,and tax multiplier.PlannedAggregateExpenditures2,7003,0003,3003,6003,9004,2004,500MPC = (Round your response to one decimal place.)ConsumptionOutput Spending2,1002,0002,6002,3003,1002,6003,6002,9004,1003,2004,6003,5005,1003,800Planned aggregate expenditure, AE4,0003,5003,000-2,5002,0001,5001,000500+0+045 line500 1,000 1,500 2,000 2,500 3,000 3,500 4,000Aggregate output, Y

Introduction MPC is the percentage of a family's income extra income that's consumed. The percentage…

Use the table below to calculate the MPC, MPS, government spending multiplier, and tax multiplier. Planned Aggregate Expenditures 2,700 Consumption Output Spending 2,100 2,000 2,600 2,300 3,100 2,600 3,600 2,900 4,100 3,200 4,600 3,500 4,200 4,500 5,100 3,800 MPC = (Round your response to one decimal place.) 3,000 3,300 3,600 3,900 Planned aggregate expenditure, AE 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0- 0 45 line 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Aggregate output, Y

Use the table below to calculate the MPC, MPS, government spending multiplier, and tax multiplier. Planned Aggregate Expenditures 2,700 Consumption Output Spending 2,100 2,000 2,600 2,300 3,100 2,600 3,600 2,900 4,100 3,200 4,600 3,500 4,200 4,500 5,100 3,800 MPC = (Round your response to one decimal place.) 3,000 3,300 3,600 3,900 Planned aggregate expenditure, AE 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0- 0 45 line 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Aggregate output, Y

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In Utopia (a country with substantial excess resources), consumers spend 70% of their incomes and save 30%; the country spends 30% of GDP on imports and the government typically takes 10% of household incomes in taxation.a) What is the value of the multiplier?Last year, the Utopian Government spent 5Bn Utopian Dollars on current expenditure; Utopian households spent 0.5Bn Utopian Dollars in “autonomous consumption” and Utopian enterprises sold goods and services worth 10 Bn Utopian dollars to other countries. Utopian investors spent 15Bn Utopian dollars in maintaining and enhancing the country’s capital equipment.b) What was the value of GDP last year?c) What was the value of the Utopian Government’s budget surplus or deficit last year?d) How would the value of the multiplier (in 2(a) change if Utopia was a closed economy (so zero imports)?e) If the Utopian economy were already at its potential GDP (ie its full -employment GDP), what would happen to the value of the multiplier?
Consider the following economy: C = 300 + 0.8 (Y – T) I = $300 G = $200 and T = $250 What is the equilibrium level of national income? What is the change in national income, if only government spending increases by $10? What is the government spending multiplier? What is the change in national income, if only taxes increase by $10? What is the tax multiplier? Based on (b) and (c), does the balanced budget multiplier theorem hold? What is the change in national income, if both government spending and taxes increase by $10 each?
14. If MPC is 0.6 and government spending increases by 350, how much does gross domestic product change? 15. If MPC is 0.6 and government tax decreases by 350, how much does gross domestic product change? (NOTE: Refer to the textbook) 16. From #14 and #15, can you tell which policy tool does have a higher multiplier effect?
Suppose the economy is described by the following: C = 50+ 0.8 (Y-T) lp = 200 G = 100 T = 100 What is the multiplier for government spending in this economy? 10 100 2.5 1.25 5
7. Study Questions and Problems #7 Suppose autonomous government spending increases by $100 billion and the value of the MPC is 0.9. Use the following table to compute four rounds of the spending multiplier effect. Round Components of Total Spending 1 Investment Consumption Consumption Consumption 2 3 4 New Consumption Spending (Billions of dollars) After an infinite number of spending-output-spending rounds, the total change in real GDP resulting from the $100 billion increase in government spending is $ billion.
1. If an economy has an MPC of 0.9 what is the multiplier? 2. If an economy has an MPS of 0.2 what is the multiplier? 3. If an economy has an MPC of .08 and the government needs to close a recessionary gap of 20 Billion dollars how much government spending should occur? 4. If an economy has an MPS of .05 and the government needs to close an inflationary gap of 10 Billion dollars how much should government spending decrease?
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What is marginal propensity to consume and marginal tax rate? Why is the gov expenditure multiplier is 4.8?
How does an increase in tax influence the size of the multiplier
Consider an economy of a nation that has the following aggregate expenditure. 1300- 1040- 780- 520- AE 260 Y = AE 260 390 520 650 780 9ło 1040 1170 1300 130 Real GDP Note: Please make sure your final answers are accurate to 2 decimal places. a) What is the value of the equilibrium national real GDP? Equilibrium = $0 b) What is the value of the multiplier? Multiplier = 0 c) If the autonomous consumption were to decrease by $520, what would be the new value of equilibrium real GDP? New equilibrium = S0 Aggregate expenditures
What is MPS when the government multiplier is 2.5? (Only write a number, meaning no units of any kind).
17. Suppose MPC = 0.6, and G increases by $350 and Tax increases by $350 simultaneously. How much would GDP change? (NOTE: Refer to your answers from #14 & #15) 18. Suppose MPC = 0.8, and the government intends to increase GDP by $300. To achieve the goal, tax must (increase decrease ) by $