Assume that a nation's marginal propensity to consume (MPC) is 0.75. A highly productive, cost-cutting technology is developed for the production of commercial airplanes. The total industry expenditure in this nation is $100 million for the immediate acquisition and adoption of this technology. (a) For this nation, identify and explain how much this spending on new technology will change each of the following in the first round: i. Income (GDP) Saving . Consumption (b) Assuming a closed economy and no leakages. identify and explain how much this spending on new technology will change each of the following at the end of the final round: i. Income (GDP) i. Saving . Consumption

Assume that a nation's marginal propensity to consume (MPC) is 0.75. A highly productive, cost-cutting technology is developed for the production of commercial airplanes. The total industry expenditure in this nation is $100 million for the immediate acquisition and adoption of this technology. (a) For this nation, identify and explain how much this spending on new technology will change each of the following in the first round: i. Income (GDP) Saving . Consumption (b) Assuming a closed economy and no leakages. identify and explain how much this spending on new technology will change each of the following at the end of the final round: i. Income (GDP) i. Saving . Consumption

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Production And Growth

Section: Chapter Questions

Problem 5CQQ

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