Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 24, Problem 4CQQ
To determine
Multiplier effect.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Economics
As interest rates rise, the effect on aggregate demand is to
Select one:
a. increase firm borrowing and investment spending.
b. increase only firm borrowing.
c. reduce consumer borrowing and consumption spending.
d. increase consumer borrowing and saving.
Consider a tax cut which affects not only consumer disposable income, but also after-tax earnings from labor supplied to labor markets and from financial assets acquired through saving. In the long run we would expect this tax cut to
A decrease the level of real GDP.
B decrease the price level.
C increase both the price level and the level of real GDP.
D decrease the price level and increase the level of real GDP.
Chapter 24 Solutions
Essentials of Economics (MindTap Course List)
Knowledge Booster
Similar questions
- A drop in the price level will have what effect in the aggregate demand model and the income-expenditure model?A.decreases aggregate demand and planned expenditures.B.increases aggregate demand, but decreases planned expenditures.C.decreases aggregate quantity demanded, but increases planned expenditures.D.increases aggregate quantity demanded and planned expenditures.arrow_forwardAssume the marginal propensity to consume (MPC) is 0.6 and the government increases taxes by $30 billion. The aggregate demand curve will shift ....... Select one: a. inward and to the left by $45 billion. b. outward and to the right by $18 billion. c. inward and the the left by $18 billion. d. outward and to the right by $45 billion.arrow_forwardAssume that the marginal propensity to consume is 0.6 and potential output is $1000 billion. If real GDP is $1100 billion: Select one: a. there is an inflationary gap. b. the economy is in long-run equilibrium. c. there is a recessionary gap. d. government transfers should be decreased.arrow_forward
- Explanationarrow_forwardSuppose that an economy is in equilibrium at a real GDP of $10 trillion at a price level of 100. An increase in autonomous expenditures of $0.30 trillion takes place. The current multiplier is 10. If the short-run aggregate supply curve is horizontal, the new equilibrium value of real GDP will be A. $0.30 billion. B. $3.00 trillion. C. $13.00 trillion. D. $10.30 trillion. Suppose that an economy is in equilibrium at a real GDP of $10 trillion at a price level of 100. The short-run aggregate supply curve is upward-sloping and there is an increase in autonomous expenditures of $0.30 trillion. This increase in expenditures enabled the real GDP to increase to $10.50 trillion. The change in the price level has changed the multiplier to A. 1.667. B. 9.70. C. 8.58. D. 5.722.arrow_forwardA5arrow_forward
- A10arrow_forwardAssume the marginal propensity to consume is 0.8. To offset a fall in income of 1,000 the government should a. raise taxes by $250. b. increase government spending and taxes by 1,000. c. increase taxes by $200. d. cut taxes by $200.arrow_forwardIf the marginal propensity to consume (MPC) is 0.80, and if policy makers wish to increase real GDP $200 million, then by how much would they have to change taxes? A.decrease by $240 million. B.decrease by $160 million. C.decrease by $180 million. D.decrease by $50 million.arrow_forward
- Federal Funds Rate 4 3.5 3 2.5 2 1.5 " S D 1 150 200 250 300 350 Quantity of Reserves IOR (interest on reserves). ON RRP (reverse REPO rate)arrow_forwardOther things being equal, a decrease in the money supply will: A. decrease both investment spending and aggregate demand. B. decrease investment spending and increase aggregate demand. C. increase both consumption spending and aggregate demand. D. increase both investment spending and aggregate demand. E. increase investment spending and decrease aggregate demandarrow_forwardGiven the following information, answer the question. Autonomous consumption = R100 million Investment spending = R300 million Government spending = R200 million Taxes = R60 million Marginal propensity to consume = ¾ The equilibrium level of output and income is equal to ______. Select one: A. R2 160 million B. R2 580 million C. R2 640 million D. R2 220 millionarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Macroeconomics: Principles and Policy (MindTap Co...EconomicsISBN:9781305280601Author:William J. Baumol, Alan S. BlinderPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Macroeconomics: Principles and Policy (MindTap Co...
Economics
ISBN:9781305280601
Author:William J. Baumol, Alan S. Blinder
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning