What is the eventual effect on real GDP if the government increases its purchases of goods and services by $75,000? Assume the marginal propensity to consume (MPC) is 0.75. $     What is the eventual effect on real GDP if the government, instead of changing its spending, increases transfers by $75,000? Assume the MPC has not changed. $     An increase in government transfers or taxes, as opposed to an increase in government purchases of goods and services, will result in an identical eventual effect on real GDP. no change to real GDP. a larger eventual effect on real GDP. a smaller eventual effect on real GDP.

Q: Suppose the government increases expenditures by $50 billion and the marginal propensity to consume…

A: Aggregate demand is the sum of Consumption, Investment, government spending and net export. So, AD =…

Q: Suppose actual real GDP is $13.19 trillion, potential real GDP is $12.96 trillion, the marginal…

A: Marginal Propensity to Consume(MPC): The marginal Propensity to Consume refers to the proportion of…

Q: 1.4. The deflationary gap in an economy is calculated to be $700 billion. The marginal propensity to…

A: NOTE: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: Assume taxes are zero and an economy has a consumption function of C = 0.68 (Yd) + $237.99.  What is…

A: The marginal propensity to consume (MPC) index measures the proportion of income that is spent on…

Q: Suppose the government seeks to achieve a balanced budget by levying taxes of $50 billion and making…

A: If MPC=0.8 then  MPS=1-MPC MPS=1-0.8 MPS=0.2

Q: If the MPC is 0.4, the MPI is 0.2, and the government increases spending by $50 million, what will…

A: Marginal Propensity to Consume, is a measure in economics that indicates the proportion of an…

Q: Suppose actual real GDP is $7.91 trillion, potential real GDP is $13.33 trillion, the marginal…

A: Marginal Propensity to Consume(MPC): The marginal Propensity to Consume refers to the proportion of…

Q: Suppose actual real GDP is $13.56 trillion, potential real GDP is $12.34 trillion, and the marginal…

A: Given Actual real GDP =$13.56 trillion Potential GDP =$12.34 trillion.Marginal propensity to consume…

Q: Explain the difference between the government purchases multiplier and the net tax multiplier. If…

A: Investment multiplier refers to the number of time income increases due to increase in the…

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: PRICE LEVEL (CPI) The marginal propensity to consume (MPC) for this economy is_ ,, and the spending…

A: Marginal propensity to consume measures the spending level for a given raise in the payment level.…

Q: where: C= $100+ 0.75 (Y-T) G=$600 T= $600 1= $200 X = $ 50 The economy is in equilibrium at a level…

A: Gross Domestic Product is the amount of goods and services produced in an economy during an…

Q: Expenditures that would exist at a zero level of income are called induced expenditures:  True or…

A: There are two types of expenditure : Induced expenditure and Autonomous expenditure  Induced…

Q: pose actual real GDP is $7.54 trillion, potential real GDP is $12.32 trillion, and the marginal…

A: The output gap is the difference between Actual output and potential output. If economy is below its…

Q: an Learning What is the eventual effect on real GDP if the government increases its purchases of…

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

Q: The following data are for the economy of Moksha. G=180 XN-50 0.25Y C=40+0.75Y I=70 a. Calculate…

A: Marginal propensity to consume is portion of additional income that household spends.Spending…

Q: Suppose real GDP is currently $12.5 trillion and potential real GDP is $13 trillion. If the…

A: Aggregate demand is the sum of consumption spending, Investment spending, Government spending  and…

Q: For the last time, consider the economy described above. You won't work directly with its numbers in…

A: Given;  Government spending= $1000 Net taxes= $1500 Output=$8000 Consumption=$3500 MPC=0.8 And…

Q: The government spends an additional $926 billion and the marginal propensity to consume is 66%. How…

A: According to the question, it is given that : The government spends an additional $926 billion The…

Q: The economic researcher defined the consumption function as follow: C= $600 billion + 0.9Y, a. What…

A: As per guidelines we can solve only first three sub-parts for you if you want another answer please…

Q: Suppose actual real GDP is $13.37 trillion, potential real GDP is $12.33 trillion, and the marginal…

A: The worldwide economy and commerce across borders have an immense impact on the financial…

Q: An increase in the marginal propensity to consume will make the spending multiplier ? An increase in…

A: Marginal propensity consume shows the ratio of  change in consumption to change in income  MPC=…

Q: The graph below characterizes a simple economy with only two components of aggregate expenditures:…

A:

Q: Why will a temporary tax increase be insignificant in reducing consumption expenditures by the…

A: Taxes are obligatory commitments that a government office, whether nearby, provincial, or…

Q: by how many trillions of dollars should the government change its lump sum taxes to fix the gap?

A: This question is about calculating the change in lump sum taxes that the government should make to…

Q: Suppose actual real GDP is $9.06 trillion, potential real GDP is $6.42 trillion, and the marginal…

A: Potential GDP (Gross Domestic Product) describes the maximum level of output that an economy can…

Q: 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…

A: Multiplier Amount of new income that is generated from an addition of extra income. Marginal…

Q: Instructions: Round your responses to two decimal places. If taxes were cut by $1 trillion and the…

A: Marginal Propensity to Consume refers to the proportion of income that consumers consume instead of…

Q: Suppose the government raised taxes by $100,000 and simultaneously raised spending by $100,000. If…

A: The multiplier represents the ratio of the change in equilibrium output (GDP) to the initial change…

Q: 1 Consider an economy defined by the following (in Şbillions and price level is fixed): C = 25+…

A: It can be defined as a concept in economics that shows the changes in the growth of the overall…

Q: If the Marginal Propensity to Consume is 0.8, this means that       For each $1 increase in…

A: Given MPC = 0.8 Multiplier = 1/MPS

Q: falls by $50 billion, then disposable income will increase by________ billion and consumption…

A: The proportion of an increase in income that is spent on spending is known as MPC. It is the most…

Q: If the Marginal Propensity to Consume is 0.9, this means that       For each $1 increase in…

A: Answer: Correct option: For each $2 increase in taxes, spending in the economy will decrease by…