Suppose that a financial crisis decreases investment spending by $100 billion and the marginal propensity to consume is 0.8. Assuming no taxes and no trade, by how much will real GDP change?
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- In an economy with lump-sum taxes and no international trade, if the marginal propensity to consume is 0.8, which of the following is true? A. When consumption increases by RM5, investment increases by a maximum of RM1. B. When consumption increases by RM5, savings increase by a maximum of RM1. C. When investment increases by RM1, income increases by a maximum of RM5. D. When investment increases by RM1, consumption increases by a maximum of RM5.If the government expenditures decrease by 100 million Euro and the aggregate demand decreases by 400, then the marginal propensity to consume is:if actual real GDP is greater than the equilibrium level of real gdp what happens to restore equilibrium to the economy?
- US Real GDP fell by 9 percent during the 2nd quarter of 2020. Real investment spending fell by 16.9 percent during Q2 of 2020, and investment spending makes up about 20 percent of GDP. How much did the decline in investment spending contribute to the decline in real GDP in the US during Q2 of 2020?The table below shows data for three fictitious countries. a. Compute the current MPC for each country. Instructions: Round your answers to two decimal places. Income and Consumption Data, Three Countries Change in Income (dollars) $9,830 40,000 5,870 Change in Consumption (dollars) $6,789 31,650 5,500 b. Which country has the highest marginal propensity to save (MPS)? (Click to select) c. If income in Bedrup increases by $360 and income in Cedrup increases by $690, which of the following statements is correct? Country Adrup Bedrup Cedrup MPC O Neither Bedrup nor Cedrup will save any dollars. O Cedrup will save more dollars. O Bedrup will save more dollars. O Dollar savings will be the same for both Bedrup and Cedrup.In the country of Krugman, a business spent $100 million building a factory. GDP eventually increased by 200 million. People spend 11% of every dollar on imports. What is the marginal propensity to consume in this economy? Write your answer as a number, between 0 and 1. If you think the answer is 0, write 0.00, not 0. Answer: Study the graph below. When will the multiplier be biggest? Select one: The multiplier will be the same size no matter what Aggregate Demand is b. The multiplier will be one no matter what aggregate demand is When aggregate demand is at AD1 d. When aggregate demand is at AD3 e When aggregate demand is at AD2 Price Level AD₁ AS e All of these are true AD₂ AD₁ GDP Why is potential output called potential, when it is not actually the most the economy can produce? Select one: a. Because potential is the most the economy can produce right now, with the technology and workers and equipment we have right now. Ob. Because economists just like to be confusing for no reason…
- Do you think that the marginal propensity to consume out of current income differs between tenured professors who have a high degree of job security and professional gamblers who never know when luck will strike?You Suppose the government increases education spending by $20 billion. If the marginal propensity to consume is 0.75, how much will total spending increase? Instructions: Round your response to one decimal place. $ billionIf when real GDP equals $800 billion, imports equal $100 billion, and when real GDP equals $900 billion, imports equal $110 billion, then what is the marginal propensity to import? Enter the answer in decimal form, rounded to one decimal place. marginal propensity to import:
- How much more would you spend if you won a $1,000 lottery prize? Why might your average and marginal propensities to consume differ?How does investment as defined by economists differ from investment as defifined by the general public? What would happen to the amount of investment made today if firms expected the future returns to such investment to be very low? What if firms expected future returns to be very high?Expert economists in the economy of Bongo estimate the following: Billion Bongos 1,000 Real output/income Government purchases 300 Total net taxes 300 Investment spending (planned) 100 Assume that Bongoliers consume 80 percent of their disposable incomes and save 20 percent.