government spending is increased by $200, taxes are reduced y $300, and the MPS is.4, equilibrium output will change by A) $500. B) $200. C) $950.
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- Assume that taxes depend on income and the MPC is 0.8 and tis 0.4. An increase in taxes of $10 billion will decrease equilibrium income by Select one: O a. $15.4 billion. O b. $25 billion. O c. $19.2 billion. O d. $27 billion.When government spending increases by $1, planned expenditures increase by $1 O A. times the spending multiplier and the equilibrium level of income will increase by $1. O B. and the equilibrium level of income will increase by $1. O C. and the equilibrium level of income will increase by $1 times the spending multiplier. O D. and the equilibrium level of income will increase by less than $1. When taxes are cut by $1, planned expenditures O A. decrease by $1 and the equilibrium level of income will decrease by $1 times the tax multiplier. O B. increase by less than $1 and the equilibrium level of income will increase by $1 times the tax multiplier. OC. increase by $1 and the equilibrium level of income will increase by S1 times the tax multiplier. O D. increase by $1 and the equilibrium level of income will increase by $1 times the spending multiplier. Click to select your answer! V560Suppose a given hypothetical economy has the following values. GDP-520 Billion, Consumption =$13 Billion; Govermment Purchase-$4 Billion; and Budget Surplus = $1 Billion How much is the public saving? OA S5 Bilion OB $4 Blion OC.52 Billion OD-$1 Billion OE S1 Billion OF $3 Billion
- The formula for the government spending multiplier is A) 1/(1+ MPC). B) 1/MPS. O C) 1/MPC. OSuppose that the level of GDP increased by $100 billion in an economy where the marginal propensity to consume is 0.5. The initial change in spending must have been: O $5 billion O $100 billion O $50 billion O $500 billionQUESTION 8 Which of these is positively related to the size of the multiplier? O a. The marginal propensity to consume O b. The marginal utility of money OC. The marginal tax propensity Od. The marginal propensity to save
- By increasing the taxes by government, the value of consumption will increase. a. True O b. FalseWhich of the following could be leakage? O A) Marginal Propensity to Consume B) Autonomous Expenditures O c) Disposable Income O D) Marginal Tax RateFigure 8-23. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. 6 on4m21 3 Tax Revenue B Tax Size Refer to Figure 8-23. If the economy is at point A on the curve, then a small increase in the tax rate will O increase the deadweight loss of the tax and increase tax revenue. O increase the deadweight loss of the tax and decrease tax revenue. decrease the deadweight loss of the tax and increase tax revenue. O decrease the deadweight loss of the tax and decrease tax revenue.
- Say, the expenditure multiplier for an economy is 2. An increase in government spending by $300 million will provide a .... million boost to the economy. Select one: O a. $150 million. O b. $300 million O c. $600 million O d. $200 million.Question: How can there be "Autonomous Spending" even when a person has zero income? O a) All of the above are correct. b) People need to consume at least a minimum to stay alive. UO People need a certain level of consumption even if they do not have income. O d) People spend money from their savings, borrowing or from unemployment or pension pay.What is the initial change in consumption if an economy's MPC is 0.75 and there is a decrease in taxes of $1 billion? O $1.75 billion O $1 billion O $1.33 billion O $0.75 billion