In the country of Krugman, a business spent $100 million building a factory. GDP eventually increased by 200million. People spend 11% of every dollar on imports. What is the marginal propensity to consume in thiseconomy? Write your answer as a number, between 0 and 1. If you think the answer is 0, write 0.00, not 0.Answer:Study the graph below. When will the multiplier be biggest?Select one:The multiplier will be the same size no matter what Aggregate Demand isb. The multiplier will be one no matter what aggregate demand isWhen aggregate demand is at AD1d. When aggregate demand is at AD3e When aggregate demand is at AD2Price LevelAD₁ASe All of these are trueAD₂AD₁GDPWhy is potential output called potential, when it is not actually the most the economy can produce?Select one:a. Because potential is the most the economy can produce right now, with the technology and workersand equipment we have right now.Ob. Because economists just like to be confusing for no reasonOc. None of these are trueOd.Because potential is the most the economy can produce in the long run. If production is overpotential, prices will rise and this will eventually make people less willing to do extra work

In the country of Krugman, a business spent $100 million building a factory. GDP eventually increased by 200 million. People spend 11% of every dollar on imports. What is the marginal propensity to consume in this economy? Write your answer as a number, between 0 and 1. If you think the answer is 0, write 0.00, not 0. Answer:

In the country of Krugman, a business spent $100 million building a factory. GDP eventually increased by 200 million. People spend 11% of every dollar on imports. What is the marginal propensity to consume in this economy? Write your answer as a number, between 0 and 1. If you think the answer is 0, write 0.00, not 0. Answer:

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section: Chapter Questions

Problem 4DQ

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There might be many factors (economic and non-economic) that affect the size of the multiplier. What are some that you think could influence its size? Which ones do you think would make it larger, and which are more likely to make it smaller?
What is the definition for the multiplier process
Study the graph below. When will the multiplier be biggest? Price Level AD1 AS AD3 AD2 GDP Select one: a. When aggregate demand is at AD3 b. When aggregate demand is at AD2 c. When aggregate demand is at AD1 d. The multiplier will be the same size no matter what Aggregate Demand is ○ e. The multiplier will be one no matter what aggregate demand is
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How does an increase in tax influence the size of the multiplier
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Increasing government purchases of goods and services would have a bigger multiplier effect on real GDP than decreasing taxes, dollar for dollar. Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a b True False
Which best describes why the multiplier exists? When people spend money, that money ends up in the pockets or bank accounts of other people or organizations, who then use that money in some way. The multiplier exists because money spent today is always more valuable than money spent in the future, due to inflation and interest rates. When people see other people spending money, they know that the economy is about to improve, leading them to spend more money. When people see the government spending more money, they realize that the government thinks that prices are low; thus, they believe it is a good time to buy things.
How would an increase in taxes influence the size of the multiplier in a four sector model?
The table contains information about the nation of Syldavia. There are no income taxes or imports in this nation. Real GDP, Y (billions of 2012 dollars) Consumption expenditure, C (billions of 2012 dollars) Investment, I (billions of 2012 dollars) Government expenditure, G (billions of 2012 dollars) 15 6 5 5 20 10 5 5 25 14 5 5 30 18 5 5 35 22 5 5 The marginal propensity to consume in Syldavia is equal to A. 0.40. B. 5.00. C. 0.80. D. 0.75. E. 0.20.
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