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 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...
Suppose that the economy is in recession with a recessionary gap of $1 trillion. The MPC is 0.9 and the tax rate on income is 30%. Compute the value of the multiplier. Suppose the AS curve is comple In the Solow model, how does the sav...
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...
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.
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...
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...
(i) sometimes increases the multiplier and sometimes decreases the multiplier (ii) makes the multiplier smaller (iii) makes the multiplier larger (iv) has no effect on the m How will marginal tax rates help with income disparity? ...
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 ...
When GDP decreases, consumption spending increases. True False Answer true or false. If false, explain why. A change in the level of consumer wealth will shift the consumption function either upward or downward. True or False...