Question: If the marginal propensity to save is 0.20, (a) What is the MPC? (b) How large is the multiplier?

If the marginal propensity to save is 0.20,

(a) What is the MPC?

(b) How large is the multiplier?

Step by Step Solution

★★★★★

3.55 Rating (169 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

a 08 b 5 Explanation a The marginal propensity to save MPS i... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

1297-B-E-M-E(8689).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

Q:

1. In our simple model, if C = 100 + 0.8y, and I = 50, equilibrium output will be ______. 2. If in Exercise 3.1 I increase to 100, a. The equilibrium income will be ______. b. The multiplier is...

Q:

The expiration of the FICA payroll tax cut of January 1, 2013 raised taxes by $110 billion per year. If the marginal propensity to save was 0.20, (a) By how much did consumer spending decrease...

Q:

Calculate the marginal propensity to consume, the marginal propensity to save, and the level of saving for each income level in the accompanying table. MPC MPS SAVING 100 200 300 400 500 0 S0 100 150...

Q:

Explain with economics reasoning why the government spending multiplier effect is larger than the tax reduction multiplier effect? Please try and explain the multiplier formula of each one of them....

Q:

1.When household marginal propensity to save (MPS) increases what happens to the size of the spending multiplier? 2.If Annie's MPC is 0.75, what would she do with an additional dollar? 3.Refer to the...

Q:

Exhibit 10-9 Imagine a hypothetical economy that does not have international trade. Assume that the aggregate price level is constant, the interest rate is fixed, and there are no taxes in this...

Q:

(1) Exhibit 10-9 Imagine a hypothetical economy that does not have international trade. Assume that the aggregate price level is constant, the interest rate is fixed, and there are no taxes in this...

Q:

QUESTION 3 1) If government purchases increases by $15 billion, how much would equilibrium output change? (mpc = 0.8) 2) If tax decreases by $10 million, how much would equilibrium output change?...

Q:

I. Use the numbers in the table below to answer the following. All gures are in billions of dollars. D1 = disposable income, C 2 consumption spending, S = saving, I 2 investment spending, AE =...

Q:

1) Economists have suggested that the relatively higher unemployment in Europe has been caused by which of the following? A) relatively high unemployment benefits B) relatively high level of worker...

Q:

Let S be a set that is bounded below. Prove that a lower bound w of S is the infimum of S if and only if for any > 0 there exists t S such that t

Q:

Cullumber Company purchased equipment on account on September 3, 2019, at an invoice price of $182,000. On September 4, 2019, it paid $3,900 for delivery of the equipment. A one-year, $1,905...

Q:

A call option allows the investor to buy a stock at an exercise price of $ 3 0 . If the current market price of the stock is $ 3 0 , what is the status of this call option? a . At the money b . Out...

Q:

40. Show that for n = 1, 2, 3, . . . , 2n

Q:

Over time, technological advance increases consumers' incomes and reduces the price of smartphones. Each of these forces increases the amount consumers spend on smartphones if the income elasticity...

Q:

Pham can work as many or as few hours as she wants at the college bookstore for $9 per hour. But due to her hectic schedule, she has just 15 hours per week that she can spend working at either the...

Q:

Potatoes cost Janice $1 per pound, and she has $5.00 that she could possibly spend on potatoes or other items. If she feels that the first pound of potatoes is worth $1.50, the second pound is worth...

Q:

First Bank is sending alumni of universities an invitation to obtain a credit card, with the name of their university written on it, for a nominal 9. 9% interest per year after 6 months of 0%...

Q:

Assume the appropriate discount rate for the following cash flows is 10.89 percent per year. Year Cash Flow 1 $2,700 2 3,100 3 5,300 4 5,900 Required: What is the present value of the cash flows? (...

Q:

Wildfilms Ltd . , who is your client, has raised a ticket complaining of loss in signal strength since the new upgrade. Earlier, the connection was established using wired transmission, which has now...