As a result of an increase in the personal income tax rate, consumers are likely to: A. spend less B. spend more C. earn more money D. save more Personal Income Tax: Personal income tax is also called individual income tax...
Suppose investment, in addition to having an autonomous component, also has a component that varies directly with the level of real GDP. How would this affect the size of the spending multiplier? (A) Please thoroughly and completely explain how the DE...
If the planned aggregate spending rises by $10 billion and the MPC is 0.75, then equilibrium GDP changes by: a) $2.5 billion. b) $10 billion. c) $40 billion. d) $7.5 billion. For MPC = 0.9, determine the size of the...
If the marginal propensity to consume is 0.75, the value of the spending multiplier will be 5. True or false? In general, the larger the marginal propensity to consume, the smaller the expenditure multiplier. As the purchasing power...
decreases; results in a movement downward along the consumption function b. decreases; shifts the consumption function upward c. decrease Calculate the multiplier if the marginal propensity to consume (MPC) is equal to 0.99. A) 10,000 B) 1,000 C) 500 D) 100 1...
In the short run, what happens to the economy when consumer spending decreases in the AD-AS model? a) Inflation is lower and the real growth rate is higher. b) Inflation is lower and the real growth rate is lower. c) Inflation is higher and the real gr ...
DI C I G AD 1,000 1,100 1,000 500 1,500 1,400 2,000 1,700 1. Calculate MPC 2. multiplier 3. equilibrium GDP 5. consumption equation 5. Assuming Define GDP and explain the difference between a final and intermediate good.
Why does a reduction in taxes have a smaller multiplier effect than an increase in government spending of an equal amount? Suppose the U.S. economy was operating at t* on the Laffer Curve in 2000. What would happen to tax revenues in 2001 as a result of the fiscal policies enacted?
If the marginal propensity to save (MPS) increases, the multiplier: a. decreases. b. can either increase or decrease, depending on what happens to the marginal propensity to consume (MPC). c. stays the same. d. increases.If ...
decreases over time. B. equals the full-employment level of real GDP. C. is above the full-employment level of real GDP. D. is below the full-employment level of real GDP. E. i Full employment GDP is $11,000. Equilibrium GDP is $10,0...