Which of the following statements are correct? The multiplier is: Select one or more: O a. the ratio of the money supply to nominal expenditure O b. the ratio of the total increase in GDP to an initial increase in exogenous spending (e.g. investment or government spending, if these are assumed not to depend on GDP) O c. the ratio of an increase in consumer spending to an increase in GDP O d. the ratio of government debt to income

Which of the following statements are correct? The multiplier is: Select one or more: O a. the ratio of the money supply to nominal expenditure O b. the ratio of the total increase in GDP to an initial increase in exogenous spending (e.g. investment or government spending, if these are assumed not to depend on GDP) O c. the ratio of an increase in consumer spending to an increase in GDP O d. the ratio of government debt to income

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Production And Growth

Section: Chapter Questions

Problem 5CQQ

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NB: This question requires a (very modest) amount of reading ahead in the early sections of Core Unit 14. Which of the following statements are correct? The multiplier is: Select one or more: O a. the ratio of the money supply to nominal expenditure O b. the ratio of the total increase in GDP to an initial increase in exogenous spending (e.g. investment or government spending, if these are assumed not to depend on GDP) Oc. the ratio of an increase in consumer spending to an increase in GDP O d. the ratio of government debt to income
Question: How can there be "Autonomous Spending" even when a person has zero income? O a) All of the above are correct. b) People need to consume at least a minimum to stay alive. UO People need a certain level of consumption even if they do not have income. O d) People spend money from their savings, borrowing or from unemployment or pension pay.
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QUESTION 6 Potential GDP Aggregate expenditure AE, 45° Y. Real GDP (Y) When real GDP is greater than Yo in the diagram above: O A. - inventories will decrease OB. ·Aggregate expenditure will be less than Real GDP OC. Aggregate expenditure will be equal to Real GDP OD. O D. inventories will increase QUESTION 7 Y G Xn $1,000 $1,400 1,400 1,400 1,400 1,400 $0 $800 -$200 2,500 5,000 7,500 10,000 2,300 3,800 5,300 6,800 1,000 1,000 1,000 1,000 -200 -200 -200 -200 Suppose you are given the data in the table above for a hypothetical economy. All data are in billions of dollars. Yis actual real GDP, and C, Ip, G, and Xn are the consumption, planned investment, government purchases, and net exports components of aggregate expenditures, respectively. Calculate the equilibrium GDP (give your answer in billions of $) Aggregate Expenditure
Suppose that one day your rich aunt unexpectedly gives you $10,000 to use as you like, no strings attached. A fraction of that gift will be consumed (the marginal propensity to consume, MPC) or saved (the marginal propensity to save, MPS). If you are like the "average American," you will save less than 5% of your $10,0002. The money you don't save is consumed and is spent on purchasing goods and services. So, whether you spend the increased income on food, entertainment, paying off loans, or a new bicycle, that money goes back into the economy, where it generates revenue through taxes, and gets spent again. This is because an injection of extra income leads to more spending, which creates more income, and so on. In this way, your money is actually spent many times and it has the effect of stimulating the economy through what is known as the multiplier effect. Gifts from rich aunts are not the only way to stimulate the economy. Governments occasionally provide an economic stimulus by…
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(1)The following macroeconomic model describes the economy of Sunderland. 1. Y= C +I + G + NX 2. C = 220 + 0.63 Y 3. 1 = 1000- 2000R 4. G = Go 5. NX = 525-0.10Y-50OR 6. M (0.1583Y-1000R)P (a)ls it a fair characterization to refer to equation #2 as a "simple" consumption function? Explain. (b)Derive the expression for equilibrium real output, Y, for this economy. Note: In your final expression for Y, restrict coefficient values to three decimal points. (c) Suppose government spending is 1200 , money supply by the Central Bank is 900 and the price level is 1, find the value of GDP (Y) and equilibrium interest rate (R) for Sunderland. Income Identity Consumption function Investment function Government Expenditure Net export function Money market equilibrium (2)The questions in this section are related to the macroeconomic model of Sunderland. (a)The expression you are asked to derive in question #1b can be considered an aggregate demand curve. Do you agree? Explain your answer. (b)Sketch…
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This problem has been solved! See the answer Explain the relationship between the aggregate expenditures model in graph (A) below and the aggregate demand–aggregate supply model in graph (B) below. In other words, explain how points 1, 2, and 3 are related to points 1’, 2’, and 3’.
2. In macroeconomic theory, total or aggregate spending is denoted by A and total or aggregateproduction of income by Y. Which one of the following statements is incorrect? A When A is greater than Y, there is disequilibrium and Y will tend to increase.B When A is equal to Y, there is equilibrium and Y will remain unchanged.C When A is less than Y, there is disequilibrium and Y will decrease.D When A is greater than Y, there is disequilibrium and A will decrease.
v Question Completion Status: A Moving to another question will save this response. Quèstion 4 Assume the economy's consumption and saving schedules simultaneously shift downward. This must be the result of: O A. The expectation of a recession O B. An increase in household wealth. O C. An increase in personal taxes. O D. An increase in disposable income. Moving to another question will save this response. SHARP AQUOS
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