O a. it must also experience diminishing re O b. the MC curve has a negative slope. C. the LRAC curve has a positive slope. O d. the MP curve has a negative slope.

Q: M Suppose that GDP (Y) IS 5.000. Consumption (C) is given by the equation C - 500 +.5(Y-T).…

A: Introduction We have given data of income of an economy. The sum of all incomes of the peoples of a…

Q: Derive the expression for government purchase multiplier in Keynesian model. If the value of G…

A: The aggregate demand is the summation of consumption expenditure, investment expenditure, government…

Q: In a Keynesian cross diagram, if the marginal propensity to save increases, a) the aggregate…

A: In a Keynesian cross diagram, if the marginal propensity to save increases, the savings function…

Q: Figure C Figure D P level 60 P level 60 ASo LRAS LRAS 50 50 ASo 40 40 30 30 20 20 AD1 10 10 ADo AD1…

A: In an economy, when the short-run equilibrium is not equal to the long-run equilibrium, that is the…

Q: If the interest rate increases, which of the following will occur? O A. The quantity of planned…

A: Answer: (1). B Explanation: Due to an increase in the interest rate, there will be an upward…

Q: (03.08 MC) What will be impact of an income tax increase on an economy's consumption spending, real…

A: * ANSWER :-  As per guidelines I answered one (1st) question only please  understood. * The OPTION A…

Q: A temporary tax cut is not likely to be effective in stimulating aggregate demand if: O a. the MPC…

A: Taxation shows the act of imposing an involuntary levy on income, capital gains estates, property,…

Q: 1. depict Keynes’s three conjectures about the consumption function.   2. explain Keynesian’s…

A: 1) First, Keynes conjectured that the marginal propensity to consume—the amount consumed out of an…

Q: 2. Suppose, • C=0.8(1-t)Y • t=0.25 • | = 900 – 50i • G=800 a) What is the equation for IS curve b)…

A: Answer: (a). To find the equation for the IS-curve let use the following equilibrium condition…

Q: The cconsumption function is the relationship between consumption expenditure and other things…

A: The detail answer of this question is provided in step 2

Q: 1. The IS curve is based on the goods market: Y C, + mpc (Y - T) + la-2r +G. Assume that the mpe 80.…

A: IS curve denotes locus of those points at which goods market is in equilibrium . It is drawn in (r ,…

Q: When the general price level falls Selectione Oa. investment falls as a result of the real wealth…

A: The fall in the general price level leads to a change in the spending of the consumers which is…

Q: 18. The multiplier concept is important in the Keynesian model because Select one: O a. both (b) and…

A: The economies tend to operate upon the working of various entities, such as the households,…

Q: 1. Consider the following IS - LM model: C = 200 + 0.25Y, I = 150 + 0.25Y – 1000i G = 250 T - 200…

A: *solution :-

Q: I. Suppose the Fed creates a new electronic dollar. This new system allows everyone to make and…

A: In the IS-LM model, IS curve shows equilibrium in the goods market and the LM curve shows…

Q: Now consider an economy in which the government lowers its spending. In the long run, the result…

A: The amount of money allotted by the public sector for the purchase of goods and the provision of…

Q: 16. Consider a closed economy with demand for goods as follows: • yd = C +I+ G C = 200 + 0.80(Y – T)…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Exercise 11.11 Optional: Suppose the central bank's monetary policy sets the interest rate accord-…

A: Aggregate Demand = Aggregate Expenditure = Y Aggregate Expenditure = C+I+G+X-IM

Q: ADVANCED ANALYSIS Assume that the consumption schedule for a private closed economy is such that…

A: Equilibrium occurs where output is equal to aggregate expenditure i.e. Y = Aggregate expenditure

Q: 1) Derive the IS curve. ) What happens to the IS curve if G increases by AG = 100 financed with a…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: If investment decreases by $70 billion and the economy's MPC is 0.5, the aggregate demand curve will…

A: Aggregate demand refers to the overall demand for goods and services in an economy. The aggregate…

Q: Consider the simplest macro model with demand-determined output. The equations are: C = 100 + 0.8…

A: Aggregate expenditure: AE = C + I + G + X -IM Where AE is aggregate expenditure C is consumption I…

Q: When the general price level rises, Select one: O a. investment rises as a result of the multiplier…

A: The one reason due to which the aggregate demand curve slope downwards is the real wealth effect.…

Q: What does the potential GDP line illustrate? OA. The potential GDP line is vertical because…

A: It is the level of Real GDP at the full employment level of output.

Q: Assume the slope of the AD curve is equal to 0.4 and government introduces a fiscal policy stimulus…

A: As per the information given in question, let the slope of AD curve be represented by S i.e. S=0.4.…

Q: What is found in Arthur Latter's model of the macro economy? A. The trade off between the MPC and…

A: Macroeconomis is the study of economics is a whole. It discusses the variable that affects the…

Q: Consider the economy of XYZ, has the following indicators in the table below: Ct = 0.7Yt ̅Gt = 0.2Yt…

A: Disclaimer :- Since you asked multipart question we are solving the first 3 subparts as per…

Q: Suppose that consumer spending initially rises by $5 billion for every 1 percent rise in household…

A: We are going to use Output relation with government expenditure, Private consumption, Investment for…

Q: Suppose the economy operates at potential output, if the amount that businesses plan to invest is…

A: At the potential output, the economy is at full employment level and all its resources are utilized…

Q: When the general price level falls Select one: a. investment falls as a result of the real wealth…

A: The real wealth effect explains that if the price level decreases, then the purchasing power of the…

Q: Refer to problem 2. The slope of the aggregate expenditure function is О .10 О 0.10 O 0.60 O 0.70

A: The aggregate expenditure represents the current market value of all the final goods and services…

Q: If investment spending is autonomous or independent of income, the slope of in the investment curve…

A: In an economy, investment spending refers to the total amount of money used by the busineses to make…

Q: 14. Refer to the accompanying figure. PAE = 1,000 + 0.75Y 4,750 4,000 3,250 1,000 45° 3,000 4,000…

A: The equilibrium output is the point where the demand and supply in the economy becomes equal to each…

Q: Assume that an economy is experiencing simultaneous equilibrium in both the product market and money…

A: Increase in government spending crowds out investment spending. Crowding out occurs when…

Q: Quèstion 8 In an open mixed economy, the inflationary expenditure gap may be described as the O A.…

A: Inflationary expenditure gap occurs when the actual equilibrium GDP (i.e., intersection point of AD…

Q: Which of the following sets of variable changes will all cause the IS Curve to shift to the right? O…

A: Consumption, Investment, government spending and net exports are components  of aggregate demand.…

Q: According to Say's law which of the following statement is correct O a. The equilibrium of national…

A: Suppliers employ labors to produce goods and services in exchange of wages.

Q: this is true or false: an increase in AS will result in more jobs for the economy as long as we are…

A: Aggregate Supply curve shows the different combinations of price(P) and output(Q) that is supplied…

Q: c) Suppose a crisis in consumer confidence decreases autonomous consumption to $100. Show…

A: Full employment level is achieved where LRAS=AD = SRAS .  beyond the level of Full employment output…

Q: 9. Suppose Dina calculates her permanent income by adaptive expectations. Year 2010 Dina's permanent…

A: Milton Friedman's Permanent Income hypothesis asserts that an individual's consumption pattern is a…

Q: the long run, if an economy's consumption spending is $5 trillion, its planned investment = $2…

A: Budget deficit is the difference between income and expenditure of government.

Q: The total expenditure in Macroland begins with these initial levels (in trillions of dollars): GDP =…

A: Consumption function: C = Ca + MPC (Y-T) Where C is consumption Ca is autonomous consumption MPC is…

Q: QUESTION TWO Consider the consumption function is given by C = 200 + 0.75YD Where YD is disposable…

A: Given  Consumption function  C = 200+0.75YD   where YD is disposable income  Investment function  I…

Q: (1)The following macroeconomic model describes the economy of Sunderland. 1. Y= C + +G+NX 2. C = 220…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: ne short-run equilibrium output when real interest is 7%. b) Find the income-expenditure multiplier.

A: Consumption (C) = 1700+0.8(Y-T) - 2000r Investment (Ip) = 3000 - 1100r Government expenditure (G) =…

Q: Aggregate output will decrease if there is a(n) O unplanned rise in inventories. decrease in…

A: Equilibrium is establuished when aggrgate expenditure ius equal to agrggate output.

Q: The consumption function is given by C=AYB where B=0.5 and A=0.3. The marginal propensity to save…

A: The marginal propensity to save (MPS) is the ratio of change in national savings and change in…

Q: points lies on the production posibilities curve according the Keynesian theory are: O 1. not normal…

A: Production possibility curve shows the possible combinations of two goods that can be produced with…