Suppose that consumers have an average MPC of 0.75. However, 20% of their income goes to the government in the form of taxes. Furthermore, 25% of disposable income is spent on foreign goods and services rather than domestic goods.
Suppose that the government consumes $750 billion, investment is $500 billion, and exports are $250 billion. Autonomous consumption is also $500 billion.
How large is the expenditure multiplier?
(round to 2 decimal places)
Suppose that consumers have an average MPC of 0.75. However, 20% of their income goes to...
1.) If the marginal propensity to consume is 0.75 and investment spending increases by $200 billion, equilibrium GDP will increase by____. $350 billion $150 billion $200 billion $266.7 billion $800 billion 2.) AE = 3000 + 0.75*RGDP. Given this equation for AE, find equilibrium GDP $1,000 $750 $12,000 $2,250 3.) The four components of aggregate planned expenditure are the real interest rate, disposable income, wealth, and expected future income the real interest rate, consumption expenditure, investment, and government expenditures consumption...
Suppose the marginal propensity to consume if 0.75 and autonomous consumption (consumption at zero income) is $4,000. If income is $50,000, consumption spending is a. $37,500 b. $41,500 C. $45,500 d. $54,000 QUESTION 4 If the consumption function for an economy is C = 180 + 75 Yd (disposable income) and spending increases by $800, then the resulting change in national income is a. +$2,800 OOO b. 5-3,200 c. $-2,800 d. $+3,200 QUESTION 5 Assume the actual GDP is $4800...
2. Algebra of the income-expenditure model Consider a small economy that is closed to trade, so that its net exports are zero. Suppose that the economy has the following consumption function, where C is consumption, Y is income (real GDP), IP is planned investment, G is government purchases, and T is taxes: C = $45 billion+0.75×(Y – T) Suppose G=$60 billion, IP=$60 billion, and T=$20 billion. Given the consumption function and the fact that, in a closed economy, planned expenditure...
OPtions Blank 1: open, Closed Blank 2: 41.3%, 39.1%, 36.2%, 40.2% Blank 3: Surplus, Deifcit Blank 4: € 257 billion, € 316 billion, € 294 billion, € 251 billion Blank 5: 25.3%, 26.5%, 27.6%, 25.6% Suppose you have the following data from Germany's national income and product accounts Billions of Euros Gross national disposable income Personal consumption Investment Government consumption Imports of goods and services Exports of goods and services Factor service imports Factor service exports Unilateral transfers to other...
The net export function illustrates that:A) net exports are a positive function of domestic income.B) net exports are independent of domestic income.C) net exports are a negative function of domestic income.D) imports are independent of domestic income.E) exports are independent of foreign income. Suppose the marginal propensity to import for country A is 0.4. Calculate the change in total value of imports of the country if national income increases by $100,000.A) $16,000B) $20,000C) $60,000D) $40,000E) $25,000 An MPI of 0.4 indicates that...
Suppose you have the following information about a fictitious economy. Assume there are no taxes in this economy. Disposable Income and Consumption Disposable Income Consumption dollars) (dollars) $e $7,000 10,500 14,000 21,880 21,000 31,589 28,000 42,880 1 35,000 52,500 42,000 Instructions: In parts a and c, enter your answers as a whole number. In part b, round your answers to two decimal places. a. What is the equilibrium level of consumption? S b. What is the MPC and MPS for...
Suppose the following are national accounts data for a given year for a fictitious country: $B AUD Consumption of fixed capital ………………………………………………. 320 Gross private fixed capital formation……………………………………….. 785 Government consumption expenditure………………………………………. 585 Government investment expenditure………………………………………… 210 Imports of goods and services………………………………………………...565 Exports of goods and services………………………………………………...690 Household consumption expenditure………………………………………..3115 Net property and other income paid overseas………………………………….34 Returns to labour…………………………………………………………….2651 Firm profits………………………………………………………………….1687 Other factor rentals……………………………………………………………482 _____________________________________________________________________ (j) Suppose that tax revenues are $17 billion for the fiscal year, then what...
Suppose the government raises its revenue by a net tax of 35 percent on income, t = 0.35. The marginal propensity to consume out of disposable income is 0.85 and the marginal propensity to import is 0.25. Note: Keep as much precision as possible during your calculations. Your final answer should be accurate to at least two decimal places. a) What is the slope of the AE function? What is the size of the multiplier? Slope of AE = 0...
5. Algebra of the income-expenditure model Consider a small economy that is closed to trade, so its net exports are equal to zero. Suppose that the economy has the following consumption function, where C is consumption, Y is real GDP, I is investment, G is government purchases, and T is for net taxes: C= 20 + 0.75 x (Y - T) Suppose G = $35 billion, 1 = $60 billion, and T = $20 billion. Given the consumption function and the fact that, in...
a. If an economy's MPC = 0.80 and income rises by $20 billion in an economy, then consumption spending should increase by: a $6 billion. b $16 billion. c $28 billion. d $20 billion. e $14 billion. b. The market interest rate is important for firms to consider when making investment decisions: a always, whether funds must be borrowed or firms have the funds on hand. b only when firms have the money to invest in capital. c only when...