If a nation's MPS is .4 and the government increases its spending by $10 billion, then the total change in aggregate demand O $4 billion O $25 billion $10 billion O $16.6 billion B
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Please also find the MPS to the question with the MPC of 0.50
And find the MPC to the question with the MPS of 0.4
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- Figure 8-23. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. 6 on4m21 3 Tax Revenue B Tax Size Refer to Figure 8-23. If the economy is at point A on the curve, then a small increase in the tax rate will O increase the deadweight loss of the tax and increase tax revenue. O increase the deadweight loss of the tax and decrease tax revenue. decrease the deadweight loss of the tax and increase tax revenue. O decrease the deadweight loss of the tax and decrease tax revenue.When government spending increases by $1, planned expenditures increase by $1 O A. times the spending multiplier and the equilibrium level of income will increase by $1. O B. and the equilibrium level of income will increase by $1. O C. and the equilibrium level of income will increase by $1 times the spending multiplier. O D. and the equilibrium level of income will increase by less than $1. When taxes are cut by $1, planned expenditures O A. decrease by $1 and the equilibrium level of income will decrease by $1 times the tax multiplier. O B. increase by less than $1 and the equilibrium level of income will increase by $1 times the tax multiplier. OC. increase by $1 and the equilibrium level of income will increase by S1 times the tax multiplier. O D. increase by $1 and the equilibrium level of income will increase by $1 times the spending multiplier. Click to select your answer! V560b. Using the model from this chapter, explain the effect on GDP from an increase in G by $5 billion. An increase in spending by $5 billion will add A. directly to Eisposable income by this amount and cause an increase in national income equal to less than $5 billion due to the multiplier effect. O B. directly to aggregate demand by this amount and lead to an eventual change in national income equal to $5 billion times the simple multiplier. O C. indirectly to aggregate demand and cause an eventual change in national income equal to $5 billion. OD. indirectly to disposable income, only a fraction of which (determined by the MPC) will then be spent, ie. national income will change by less than $5 billion.
- Why does a $1 increase in government purchases lead to more than a $1 increase in income and spending? OA. Through the government purchases multiplier, the $1 increase in government spending will lead to a decrease in aggregate demand and national income, which will lead to a decrease in induced spending OB. Through the government purchases multiplier, the $1 increase in government spending will lead to an increase in aggregate demand and national income, which will lead to a decrease in induced spending OC. Through the government purchases multiplier, the $1 increase in government spending will lead to an increase in aggregate demand and national income, which will lead to an increase in induced spending OD. Through the government purchases multiplier, the $1 increase in government spending will lead to a decrease in aggregate demand and national income, which will lead to an increase in induced spendingSuppose real GDP is $3,500, what of these is occuring? $4,000 Supply 45-degree line Planned aggregate spending, AEplanned (billions of dollars) AEPlanned 3,000 Demand 2,000 1,400 1,000 800 $500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Real GDP (billions of dollars) O Supply shortage. Exces supply. O Equilibrium. Excess demand.QUESTION 8 Which of these is positively related to the size of the multiplier? O a. The marginal propensity to consume O b. The marginal utility of money OC. The marginal tax propensity Od. The marginal propensity to save
- What is the formula for the marginal propensity to expend? A aggregate expenditures/A national income O b. A autonomous expenditures/A national income O a. O c. A consumption/A national income O d. A national income/A induced expendituresIf the long-run aggregate supply curve is vertical, the a change in net taxes on aggregate output in the long run is zero. Select one: O a. additional tax revenue resulting from O b. multiplier effect of O c absolute value of Od. change in government spending based onQUESTION 47 An increase in the marginal propensity to consume (MPC) O a. increases the multiplier, so that changes in government spending have a larger effect on aggregate expenditure (aggregate demand). O b.increases the multiplier, so that changes in government spending have smaller effect on aggregate expenditure (aggregate demand). O c. decreases the multiplier, so that changes in government spending have a larger effect on aggregate expenditure (aggregate demand). O d. decreases the multiplier, so that changes in government spending have a smaller effect on aggregate expenditure (aggregate demand).
- Say, the expenditure multiplier for an economy is 2. An increase in government spending by $300 million will provide a .... million boost to the economy. Select one: O a. $150 million. O b. $300 million O c. $600 million O d. $200 million.What is the initial change in consumption if an economy's MPC is 0.75 and there is a decrease in taxes of $1 billion? O $1.75 billion O $1 billion O $1.33 billion O $0.75 billionThe Congressional Budget Office estimates the size of the government purchases multiplier to be O A. 0.1 - 0.6. O B. 0.3 - 1.5. OC. 0.5 - 2.5. O D. 2.0 - 3.0.
