Question: a . How much did consumption decrease in the economy if the government lowered its spendings by $ 1 0 0 million and the marginal

a. How much did consumption decrease in the economy if the government lowered its spendings by $100 million and the marginal propensity to consume is 0.8?
b. After an increase in government spending the aggregate expenditure in the economy increased by $1 billion. Determine the size of the original increase if MPC=0.6!
c. How much is the marginal propensity to consume in the economy if a $150 million increase in government expenditure resulted in a $3 billion increase in aggregate expenditure?
a . How much did consumption decrease in the

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock 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

Students Have Also Explored These Related Economics Questions!

Q:

Hi. Please assist me with collective/scenario questions 17 to 27. It is quite difficult. 21. If this economic growth rate of 3.5% is to be achieved by increasing government spending by how much...

Q:

Answer these following questions please. The Aggregate Expenditures Models (48 marks) A/ Consider the Closed Economy with no Government Participation Planned Expenditures: AE = C + 1 Consumption: C =...

Q:

Refer to the following graph: Label the missing items: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Y0; C + TR0; C + TR1; Y = C0 + I + G; Y1...

Q:

:solve the following step by step solution, UESTION 10 Consider the monthly data, including the estimates for March 2020, and the information in the articles. Which of the following is the best...

Q:

2.What types of variables are Government Spending and Taxes in a closed economy model? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer....

Q:

ollowing sequences of events would 11. The Federal Reserve decreases the federal funds 16. When the central bank sells government bonds on ilibrium interest rate occur if the Federal Reserve...

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:

choose the correct option: 1) variable is exogenous if: a.it is determined outside the model b.it has no effect on any variables in the model c.it is determined within the model d.it causes output to...

Q:

Question 1 (1 point) Potential GDP focuses on the: Question 1 options: long-run supply side of the economy. long-run demand side of the economy. short-run supply side of the economy. short-run demand...

Q:

One possible result of a fall in aggregate demand coupled with a stableshort-run aggregate supply is A. a rise in the stock market. B. a recession. C. an increase in employment levels. D. an economic...

Q:

Early next year, the Strasburg Company plans to raise a net amount of $270 million to finance new equipment and working capital. Two alternatives are being considered: common stock can be sold to net...

Q:

In a given training center, the total number of students is (100) students. (70) students are taking training course 1, and (50) students are taking training course 2. (30) students are taking both...

Q:

Question 3 8 2 pts Tom is age 6 5 and ready to retire. He wants to manage his risk of dependent old age. He has saved as much money as he thinks he will need and will also receive Social Security...

Q:

Proposed Changes or Amendments: Explain what you would like to see changed in the HIPAA law and why. Consider the following questions in your response: How will you approach the change implementation...