The following information applies to questions 1-6. Suppose we have the following information for the simple...
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The following information applies to questions 1-6. Suppose we have the following information for the simple (fixed r, fixed P, fixed W) Keynesian model. C = 400+ 0.8 = 400+ 0.8 (Y-T) where C is the consumption function, (Y-T) is disposable income, I is investment, G is government spending, and T is taxes. 1. What is autonomous consumption? O $500 O none of the options. O $400 O $0.80 O $320 1=310 G = 140 T = 200, 2. What can you say about the government's budget situation? (Hint: Think about what "G" and "T" stand for.) The budget is balanced. O There is a budget surplus. O None of the other options. O We cannot say anything about the government budget. O There is a budget deficit. 3. What is equilibrium income ($output), ye? O $3,450 O $6,900 O $5,450 O $5,050 O $2,050 4. What is the numerical value the marginal propensity to consume? 533.33 400 0.2 O 0.75 O 0.8 5. What is the numerical value of the marginal propensity to save? O 0.75 O533.33 O 400 0.8 O 0.2 6. If government spending increased by $80, equilibrium Y would (#6 IS THE LAST OF THE QUESTIONS REFERRING TO INFORMATION AT THE BEGINNING.) increase by $80. decrease by $160. O increase by $400. O increase by $320. O increase by approximately $106.67. The following information applies to questions 1-6. Suppose we have the following information for the simple (fixed r, fixed P, fixed W) Keynesian model. C = 400+ 0.8 = 400+ 0.8 (Y-T) where C is the consumption function, (Y-T) is disposable income, I is investment, G is government spending, and T is taxes. 1. What is autonomous consumption? O $500 O none of the options. O $400 O $0.80 O $320 1=310 G = 140 T = 200, 2. What can you say about the government's budget situation? (Hint: Think about what "G" and "T" stand for.) The budget is balanced. O There is a budget surplus. O None of the other options. O We cannot say anything about the government budget. O There is a budget deficit. 3. What is equilibrium income ($output), ye? O $3,450 O $6,900 O $5,450 O $5,050 O $2,050 4. What is the numerical value the marginal propensity to consume? 533.33 400 0.2 O 0.75 O 0.8 5. What is the numerical value of the marginal propensity to save? O 0.75 O533.33 O 400 0.8 O 0.2 6. If government spending increased by $80, equilibrium Y would (#6 IS THE LAST OF THE QUESTIONS REFERRING TO INFORMATION AT THE BEGINNING.) increase by $80. decrease by $160. O increase by $400. O increase by $320. O increase by approximately $106.67.
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