Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 9.2, Problem 1ST
To determine
Explain the inflationary gap and recessionary gap.
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"In the classical model, the equilibrium level of real
Gross Domestic Product (GDP) is completely
supply-determined." Do you agree or disagree?
Why?
Which of the following statements best describes the multiplier effect in economics?
A. The process of reducing government spending to stimulate economic growth.
B. An increase in consumer saving when government expenditure decreases.
c. A phenomenon where an initial increase in spending leads to a more significant overall increase in
economic output.
D. The concept of a fixed relationship between inflation and unemployment rates.
The marginal propensity to consume is is .3 find the marginal propensity to save.
Chapter 9 Solutions
Macroeconomics
Ch. 9.1 - Prob. 1STCh. 9.1 - Prob. 2STCh. 9.1 - Prob. 3STCh. 9.2 - Prob. 1STCh. 9.2 - Prob. 2STCh. 9.2 - Prob. 3STCh. 9.3 - Prob. 1STCh. 9.3 - Prob. 2STCh. 9.3 - Prob. 3STCh. 9 - Prob. 1QP
Ch. 9 - Prob. 2QPCh. 9 - Prob. 3QPCh. 9 - Prob. 4QPCh. 9 - Prob. 5QPCh. 9 - Prob. 6QPCh. 9 - Prob. 7QPCh. 9 - Prob. 8QPCh. 9 - Prob. 9QPCh. 9 - Prob. 10QPCh. 9 - Prob. 11QPCh. 9 - Prob. 12QPCh. 9 - Prob. 13QPCh. 9 - Prob. 14QPCh. 9 - Prob. 15QPCh. 9 - Prob. 16QPCh. 9 - Prob. 17QPCh. 9 - Prob. 18QPCh. 9 - Prob. 1WNGCh. 9 - Prob. 2WNGCh. 9 - Prob. 3WNGCh. 9 - Prob. 4WNGCh. 9 - Prob. 5WNGCh. 9 - Prob. 6WNGCh. 9 - Prob. 7WNG
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- answer True or false Classical Economists say that:GDP = Consumption + Investment -and-GDP = Consumption + Savings True Falsearrow_forwardConsider an economy described by the following:Autonomous consumption ( a ) = 100Autonomous Investment = 100Marginal propensity to consume = 0.75 2. What is the consumption function for this economy?arrow_forwardElaborate on the concept of consumption puzzle?arrow_forward
- Suppose that the government increases taxes and government purchases by equal amounts. What happens to the interest rate and investment in response to this balanced- budget change? Does your answer depend on the marginal propensity to consume?arrow_forward"An economy is dynamically inefficient if its citizens are short - sighted and save too little. Savings should be stimulated by the policy maker in a dynamically inefficient economy." Explain and evaluate these propositions.arrow_forwardThe Role of the Consumption Functionarrow_forward
- In the long run, what happens to consumption in the economy when people are saving less? a) remains the same b) cannot tell from the graph c) decreases d) increasesarrow_forwardI'm just asking for question c, not a or barrow_forwarda) Draw a graph of a consumption function (with disposable income on the x-axis and consumption on the y-axis). b) On the graph from Part a, show how we can “see” the Marginal Propensity to Consume (MPC) and provide a brief explanation.arrow_forward
- According to the multiplier concept when there is a change in any one of the components of total expenditures (C, I, G, or X-IM), a multiple impact upon: a) the rate of unemployment will occur. b) saving in the economy will occur. c) household expenditures will occur. d) income will occur.arrow_forwardIf consumers decide to increase saving, then C decreases, r decreases, I increases, and Y:arrow_forwardFrom the information below calculate aggregate demand; Consumption (C) = $200 + 0.6Y Investment (I) = $300 Government (G) = $100 Net Export (NX) = $50 What is the value of the marginal propensity to save?arrow_forward
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