Suppose that the marginal propensity to consume is 0.8, and investment spending increases by $100 billion. The increase in aggregate demand is: ☐ a) ○ b) $125 billion, composed of $100 billion in investment spending and $25 billion in consumption. $500 billion, composed of $100 billion in investment spending and $400 billion in consumption. c) $100 billion, the amount of investment spending. d) $80 billion, composed of $100 billion in investment spending and a decrease in consumption of $20 billion.
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- Suppose that the marginal propensity to consume is 0.8, and investment spending increases by $100 billion. The increase in aggregate demand is: a) b) $125 billion, composed of $100 billion in investment spending and $25 billion in consumption. $500 billion, composed of $100 billion in investment spending and $400 billion in consumption. c) $100 billion, the amount of investment spending. d) $80 billion, composed of $100 billion in investment spending and a decrease in consumption of $20 billion.The table shows real GDP, Y, the components of planned expenditure, and aggregate planned expenditure (in millions of dollars) in an economy in which taxes are constant. Calculate the marginal propensity to consume and the marginal propensity to import. What is equilibrium expenditure? >>> Answer to 1 decimal place. The marginal propensity to consume is Planned expenditure Y C G X M AE 0 2.0 1.75 1.0 1.25 0.0 6.0 2 Q 1.75 1.0 1.25 0.4 6.8 4 4.4 1.75 1.0 1.25 0.8 7.6 6 5.6 1.75 1.0 1.25 1.2 8.4 8 6.8 1.75 1.0 1.25 1.6 9.2 10 8.0 1.75 1.0 1.25 U 10.0 12 9.2 1.75 1.0 1.25 2.4 VThe multiplier (expenditure multiplier) is the ratio between which two measures? marginal propensity to consume AND the size of an autonomous change in nominal GDP marginal propensity to save AND marginal propensity to consume total change in nominal GDP caused by an autonomous change in aggregate spending AND the size of the autonomous change in aggregate spending O total change in real GDP due to an autonomous change in aggregate spending AND the size of the autonomous change in aggregate spending
- 24. If $1,000 of additional spending occurs and the marginal propensity to consume is 0.8, the total effect on the economy is an increase of A) S800 B) $1,000 C) $5,000 D) $8,000 in income or output.Income is 678 Trillion and consumption is 662 Trillion then income increases to 698 Trillion and consumption increases to 677 Trillion. What will the marginal propensity to consume be? .8 Using the information and the calculations from question seven what will the multiplier be 4 Using the information and the calculations from questions seven and eight and given a full employment level of aggregate expenditure GDP of 600 and a current level of aggregate expenditure of 560 how much would government spending have to change to regain the full employment level of GDP Increase in government spending of 8 Decrease in government spending of 8 Increase in government spending of 10 Decrease in government spending of 10 None of the above Using the information and calculations form questions seven, eight, and nine how much would government taxes have to change by in order to regain the full employment level of GDP Increase taxes by 8 Lower taxes by 8 Increase taxes by…The spending multiplier, m, is V/1- MPC). a) f the MPC is 0.9, what is the spending mutiplier? b) Now suppose government spending increases by $90 million. By how much will GDP rise? million
- Use the figure to calculate the marginal propensity to consume (MPC) between point A and point B. MPC = 0.75. (Enter your response rounded to two decimal places.) O Real consumption spending ($ billions) Consumption and National Income $3,750- $2,250- m C $3,000 $5,000 Real national income or real GDP ($ billions)Calculate the total change in aggregate spending if investment decreases by $250 billion and the marginal propensity to consume is 0.9. Instructions: Enter your response as a whole number. Aggregate demand decreases by $ ________billion.An economy experiences an MPC of 0.75. Interest rates rise in the economy causing initial change(s) in spending of $5 billion. Simultaneously, net taxes fall by $7 billion. What is the net change to real GDP as a result of these initial impacts on the economy? A decrease of $12 billion in real GDP A decrease of $50 billion in real GDP OA decrease of $19 billion in real GDP A decrease of $61 billion in real GDP A decrease of $68 billion in real GDP
- Consider the table given below. The marginal propensity to consume is a.0.2 b.0.4 0.0.6 d.0.8 National Income (GDP) Consumption Investment Government Expenditure 0 500 1,000 1,500 2.000 2,500 3.000 3,500 400 800 1.200 1.600 2,000 2,400 2,800 3.200 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50The spreadsheet lists the components of aggregate planned expenditure at different levels of real GDP in billions of dollars Calculate the marginal propensity to consume The marginal propensity to consume is >>>Answer to 1 decimal place In equilibrium, autonomous expenditure is 5 and induced expenditure is A B с D E Y 0 100 200 190 50 C 30 50 -1818181RISIRIS SAME 300 270 50 350 50 400 F 500 430 50 G 600 510 50 G 00 35 35 60 35 110 50 60 THE ▬▬▬▬▬ 818181812 plaalala B X M 0 15 30 60 60 35 45 60 75 55555 35 60 35 calc -- M 60 35 S 901) Following is information for the economy of Sparkle. All units are milliondollars. Their autonomous consumption is $700, and the marginal propensity to consume is 0.8.Investment spending is constant at $380, and government expenditure is constant at $300.Exports are constant at $500, and imports are constant at $800. Net taxes are constant at $100.Calculate and state your answers for the following questions.a) What is the value of consumption in this economy when the real GDP is $1100?b) What is the value of autonomous aggregate planned expenditure i.e. AE0?c) What is the value of equilibrium aggregate expenditure for this economy?d) What is the value of unplanned changes in the inventory investment when real GDP is$4000?e) What is the size of the multiplier in this economy?f) If investment spending increases by $50, what would be the value of the change in theequilibrium real GDP?