If private sector businesses suddenly lose confidence in the economy, Keynes argued that this would likely lead to a _________ shift in the investment schedule and thus a __________ shift in the AD schedule. (Choose the appropriate answer.)
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If private sector businesses suddenly lose confidence in the economy, Keynes argued that this would likely lead to a _________ shift in the investment schedule and thus a __________ shift in the AD schedule. (Choose the appropriate answer.)
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- What is Keynes; law?The Aggregate Expenditure Model is traditionally called the” Keynesian Cross”. Use the Aggregate Expenditure Keynesian Cross diagram to show what happens to the economy under the following conditions: (Note that is different from the AS-AD Model.) What happens in the model if government expenditures are increased (G↑)? What happens if taxes are raised (T↑)? What happens to the US economy if the rest of the world experiences economic growth and imports more US goods (X↑)?The accompanying graph represents the Keynesian cross for a country, where the planned aggregate spending line (Planned AE) is graphed against a 45° line. Suppose that there is an autonomous decrease in aggregate spending of $40 billion in this country. a. Show this change on the graph (you can drag and shift the whole line or either of the endpoints) and answer the following two questions. b. What is the initial unplanned inventory investment? If the number is negative, be sure to include a negative sign. billion dollars c. After firms adjust their production, what is the total change in real GDP? If the number is negative, be sure to include a negative sign. following two questions. vay and answer the b. What is the initial unplanned inventory investment? If the number is negative, be sure to include a negative sign. billion dollars c. After firms adjust their production, what is the total change in real GDP? If the number is negative, be sure to include a negative sign. billion…
- Given: C = 100 + 0.75Yd; I = 120 - 0.1Y – 200i; G= 40; T = 40 What is the marginal propensity to consume?The multiplier effect represents Keynes’s insight that:(a) households would rather spend than save.(b) businesses prefer to be in the expansion phase of the business cycle.(c) an increase in spending will increase equilibrium income by more than the initial increase in spending.(d) an increase in equilibrium income will increase the marginal propensity to consume.According to the Keynesian cross model, if the marginal propensity to consume is 0.75, by how much (i.e. how many billion dollars) will income increase if the government increases government purchases by $120 billion? Hint: Enter only the number of billions and no dollar sign in your response (e.g. enter only '100' in the case of $100 billion). billion
- the question is true or false: "An increase in business investment spending has the same effect on the level of ad as an increase in the same amount of government spending" can you explain what the answer is? Would they equal each other out?Question 8 Real GDP in the economy is $7,900 Billion and the Marginal Propensity to Consume is 0.56. What will Real GDP in the economy be, in $ Billions, after a $10 Billion increase in Government Spending? (Round your FINAL answer to the nearest whole number/integer.) (BE VERY CAREFUL NOT TO ROUND "MIDDLE" CALCULATIONS. ONLY ROUND THE FINAL ANSWER.) (Do not enter a dollar sign, $. or the word "Billion", just the number.)Find the consumption expenditure from the following:- Autonomous consumption = $300 Marginal propensity to consume = 0.44 National income = $2000
- “Explain Keynes’s theory of investment and why it is central to his more general theory of output and employment. Are Keynes’s ideas still relevant today?”The chart below gives the data necessary to make a Keynesian cross diagram. Assume that the tax rate is 0.4 of national income, the MPC out of after-tax income is 0.9, investment is 58, government spending is 60, exports are 40, and imports are 0.1 of after-tax income. Alt Text: This chart contains the following columns: National Income, After-tax income, Consumption, I+G+X, Minus Imports, and Aggregate Expenditures. The National Income Column contains the following values for each of the following rows: 100, 200, 300, 400, 500, and 600. The only other value provided is the consumption, 104, for national income, 100. What is the equilibrium level of national income for this economy? A) Y=200 B) Y=400 C) Y=300 D) Y=500The chart below gives the data necessary to make a Keynesian cross diagram. Assume that the tax rate is 0.4 of national income, the MPC out of after-tax income is 0.9, investment is 58, government spending is 60, exports are 40, and imports are 0.1 of after-tax income. Alt Text: This chart contains the following columns: National Income, After-tax income, Consumption, I+G+X, Minus Imports, and Aggregate Expenditures. The National Income Column contains the following values for each of the following rows: 100, 200, 300, 400, 500, and 600. The only other value provided is the consumption, 104, for national income, 100. What does consumption equal when income equals 600? Group of answer choices a. 324 b. 374 c. 540 d. 104