Construct the multiplier model using the consumption function: and an investment spending I =20 (assume no G and NX): a) How much is the expenditure multiplier? b) How much is the equilibrium output with the given C and I? c) If government will increase its spending G = 20, how much will be the change in Y?
Q: how do we make the best use of the available resources
A: Scarcity: - it is a very basic problem of economics that is related to the limited availability of…
Q: Measured real wages understate living standards because O The CPI overstates growth Wages ignore…
A: When talking about real wages, it is the earned income of an individual in terms of money.
Q: Consider the economies of Hermes and Gribinez, both of which produce gobs of goo using only tools…
A: We can productivity in simple language say it is considered as that relative measure of the…
Q: In a monopolistic competition market structure it is likely that if a company is earning profits it…
A: A) in perfect competitive market:- 1) in perfect competitive market, there are many number of…
Q: In the United States of America the top 20% of households earn about ________ per cent of all the…
A: Income inequality is a very acute economic issue which is present in almost all the economies of the…
Q: What is Lightbox Diamonds? How does the creation and market positioning of Lightbox Diamonds…
A: Lightbox Jewelry advertises diamonds beginning at $800 per carat. Pink, blue, and white diamonds are…
Q: Answer The following question The demand for good X has been estimated to be Qx = 10 - 0.5Px +…
A: The own price elasticity of demand is the proportion alternate in the amount demanded of a good or…
Q: The following diagram shows supply and demand in the market for smartphones. Use the black point…
A: Total surplus is the aggregate of Consumer surplus and the producer surplus , Consumer surplus is…
Q: 1. For a firm, the more generic/commodity like is its product, a.The greater will be its profits…
A: Consumer theory tells that consumer's sole aim to get equilibrium where satisfaction level is…
Q: Consider a firm in a perfectly competitive market. The firm’s marginal cost, average cost and…
A: Suppose that the current market price is p=10. In order to maximize its profit, the firm will…
Q: QUESTION 25 You buy a mortgage pass through security with a 7.5% coupon rate and a 5.5% discount…
A: Mortgage pass-through security A pass-through security is a collection of fixed-income securities…
Q: It is fair to discriminate in the amount of benefits for life and health policies: between…
A: When talking about discrimination, it refers to the situation when an individual is unfairly treated…
Q: A project has the following cash flows. Determine the exact ROR for this project. Item Cash…
A: Given, A project has the following data:First Cost : $250,000Annual Revenue : $16,000Life : 20…
Q: ) How can a firm determine the best level of output and price for products that are jointly produced…
A: Introduction The firm establishes the optimum or best level of output and pricing for commodities…
Q: Consider the Solow model. Using suitable diagrams, compare the different dynamics for the levels and…
A: Solow model represents steady level of per worker capital growth and per worker output. y=f(k) y=…
Q: Discuss the arguments for privatization. Are you for or against privatization?
A: The measure that depicts an increase in the production of services and goods in an economy during a…
Q: 28-Which of the following is the best example of a natural monopoly? A) owning the only licensed…
A: A natural monopoly is a monopoly in which the main producer in an industry, generally the first…
Q: Which of the following is NOT generally considered a theme in the political and economic development…
A: * ANSWER :- (9) from given data the answer is given as
Q: If beer and marijuana had been found to be substitutes, what would a tax placed on beer do?…
A: Two goods are substitutes when only one of them is consumed
Q: Q2.1: An engineer received a bonus of $10,000 that he will invest now. He wants to calculate the…
A: P = $10,000 F = ? i = 9% per year n = 20 years
Q: The Affordable care act passed by the Obama Administration initially required all US taxpayers to…
A: The Affordable Care Act (ACA) is the program that was passed in 2010. Initially, it required all the…
Q: (Long-run costs,) Carmela's pasta factory employs workers and pasta machines according to the lowing…
A:
Q: (d) What could shift the money supply in the way indicated in part (c)? (e) Assume that the original…
A: The monetary policies are those policies which are enacted by the central bank of a country to…
Q: Suppose Indian government borrows 50,000/- more next year than this year. Use a supply-and-demand…
A: Meaning of Demand and Supply: The term demand refers to the willingness of an individual to…
Q: 1. what does the immigration Law consist of? 2. How does it help people that have no papers?…
A: Since you have asked a question with multiple sub-parts, we will solve first three questions for…
Q: (Coal 091S OSTS OPTS OETS ORTS OUTS 00S 0S 0S 0S 0S 0SS ONS DES O2S ots of 0.0% %50 1.0% 1.5% 2.0%…
A: The Federal Reserve System (or the Fed) is the central bank and money-related power of the United…
Q: A. Graph total fixed cost, total variable cost and total cost B. Explain how the law of diminishing…
A: Answer A. TVC + TFC = TC Both TC and TVC run in concurrently. The x-axis of TFC is parallel. At zero…
Q: In the United States of America the top 50% of households have about ________ per cent of all wealth…
A: Such facts give us an idea about the wealth inequality present in the country.
Q: CHOICES: a. Both statements are TRUE b. 1st statement is TRUE, 2nd is FALSE c. Both statements are…
A: An economist is a person who analyses how individuals make choices and is interested in utilizing…
Q: ifered a crane-mounted pneumatic breaker which will cost P 1,200,000 with a s 000 at the end of its…
A: Interest on investment the occasional receipt of inflows on monetary instruments like bonds,…
Q: The graph below shows a Production Possibilities Frontier for an economy producing only bread and…
A: Production possibilities frontier shows the maximum production of two goods that can be achieved…
Q: At one point in time, cowrie shells were used as money. Group of answer choices 1. false 2. true
A: Cowrie shells were particularly valuable in ancient Africa.
Q: Buyer Willingness to Pay David $8.00 Laura $7.00 Ty $5.50 Mallory $4.00 Audrey $3.50 In the above…
A: Demand refers to the willingness to buy, of a consumer or consumers of a good or service at the…
Q: 2. (Short-run costs, Evren wants to go into the donut business. For $500 per month he can rent a…
A: Given information Production function: Q = 5KL Where Q is tons of donuts K is capital L is labor…
Q: Question: A tax is imposed on a certain good, and it produces revenue of $5,000 for the government.…
A: Given: Total Revenue = $5000 Reduction in Consumer Surplus = $3000 Reduction in producer surplus =…
Q: People need medications, but the poor often cannot afford them. Governments may not provide…
A: There are many enhance can be made regarding more innovation for producing varieties of medicines.…
Q: In a small open economy, is a negative supply shock or a negative demand shock more damaging for…
A: Negative supply shocks result in a reduction in aggregate supply.It causes a left shift in the…
Q: Exer 9A. In 2010, NEDA decided to add Service F in the basket of products for CPI computation Assume…
A: Given data Average CP= CPn/CP0
Q: Explain the difference between the institutionalized and person-centered models of support in…
A: The institutionalized support concept is primarily focused on improving or correcting societal…
Q: According to the analysis and data presented in class, the following are facts and possible reasons…
A: The answer is - Salaries for average wage earners have increased in proportion to their real…
Q: Figure 10-12 Price Supply External benefit Line 1 Quantity Refer to Figure 10-12. Which of the…
A: Externality leads to either overproduction or underproduction . And it is spillover effect of an…
Q: There are thousands of wheat farmers who produce and sell wheat and there are millions of consumers…
A: The market is a location where the transaction of services and commodities takes place. It is…
Q: Discuss the challenges to global governance
A:
Q: Price P₁ B O S D Quantity What area represents Producer Surplus when the price is P₁? Oc A B
A: Since , we know that producer surplus is the difference between the price a which a producer is…
Q: What were the implications of the crisis on the financial industry? (Savings and Loans crisis in the…
A: The Savings and Loan Crisis (S&L) was a long-drawn-out financial crisis. Between 1986 and 1995,…
Q: What is Buying behavior?
A: Meaning of Microeconomics: The term microeconomics refers to that situation under which the…
Q: Which of the following happens to us because of scarcity? Question 2 options: We…
A: Scarcity refers that the shortage which is the core problem in the economy , which means that unable…
Q: What is fiscal policy and what is the crowding out effect of expansionary fiscal policy?
A: Government use various policy instruments in the economy to properly balance and maintain it and…
Q: A nation’s population size and the affluence of its citizenseach influence its resource consumption…
A: Total impact=Personal impact×Population
Q: One of the financial sectors central purposes is to take ____________ and turn them into __________.…
A: Financial sector is the sector of economy which includes firms and institutions that provide…
Construct the multiplier model using the consumption function: and an investment spending I =20
(assume no G and NX):
a) How much is the expenditure multiplier?
b) How much is the equilibrium output with the given C and I?
c) If government will increase its spending G = 20, how much will be the change in Y?
Step by step
Solved in 4 steps
- Construct the multiplier model using the consumption function C = 100 + 0.80Y and an investment spending I =20 (assume no G and NX): a) How much is the expenditure multiplier? b) How much is the equilibrium output with the given C and I? c) If government will increase its spending G = 20, how much will be the change in Y?If the consumption function is given by C=20+3/4 Y then the value of multiplier will be???The autonomous consumption expenditures and autonomous investment expenditures in an economy are $250 and $350, respectively. It is also observed that individuals spend 90% of their additional income on consumption. Using the information provided above, the aggregate expenditure function for this economy is: (Round your response for the intercept term to the nearest whole number and for the slope term to two decimal places.) The simple multiplier for this economy can be calculated as 10. (Round your response to one decimal place.) The value of the simple multiplier implies that a $200 decrease in the autonomous investment expenditures would lead to a $ in the equilibrium level of actual income. (Round your response to the nearest dollar.) increase AE = 600+ 0.9 Y decrease
- Construct the multiplier model using the consumption function C = 100 + 0.80Y and an investment spending I =20 (assume no G and NX): a) If government will increase its taxes T = 20, much will be the Y change due to the tax? b) If you compare Y in letter b with the Y in letter, by how much did equilibrium change after the increase in both G and T?For the following problem, assume that the MPC, b, takes into account how much consumers spend as total income (Y) in the economy is changes. (Also: Hint GDP = Total Y) So we can rewrite our consumption function as :C= a +bYAssume:a= $2900 billionb=.75GDP= $9,000 billion.A) What is C=B) What is S=C) If consumers were the only ones buying goods in the economy, would the economy have an excess supply of goods, excess demand of goods or would the economy be at equilibrium ?Assume that Consumption is C = c(Y-T); Taxes T = tY; Investment / = -bi; and Government expenditure (G) is exogenous. Determine the multiplier for an increase in the tax rate.
- What is the multiplier effect? The multiplier is simply the ratio of the change in (r spending. Multiplying the initial change in spending by the multiplier gives you the amount of change in real GDP. G ) to the initial change in The multiplier effect can work in a positive or a negative direction. An initial increase in spending will result in a (smaller, larger) increase in real GDP, and an initial decrease in spending will result in a larger (increase, decrease ) in real GDP. The multiplier magnifies the fluctuations in economic activity initiated by changes in investment spending, net exports, government spending, or consumption spending. The multiplier is related to the marginal propensities. The MPC is (directly, inversely ) related to the size of the multiplier. The MPS is (directly, inversely ) related to the size of the multiplier. What will multiplier and MPS be when the MPC is .9, and 0.5? MPC MPS Multiplier .9 .5 How much of a change in GDP will result if firms increase…Suppose that the consumer’s consumption demand function is given by Cd = 0.8(Y−T)+10. Investment is Id = 20, government expenditure is G = 10, and tax is T = 10. What is the equilibrium GDP (income)? Suppose that government expenditure increases by 10 units while tax is unchanged. How will GDP change? What is the multiplier? Suppose that government expenditure increases by 10 units while tax also increases by 10 units. How will GDP change? What is the multiplier?For the multiplier to be positive what condition must be satisfied?
- Consider an economy that is characterised by the following set of equations: C = co + C1YD Yp Y - T I bo + bịY %3D Government spending (G) and taxes (T) are constant. Note that investment () is proportional to output (Y). a) Solve for equilibrium output. b) Using your answer derived in (a) identify and discuss the multiplier. How does the relation between investment and output affect the value of the multiplier?Find out the value of the multiplier if the MPC is zero?1) Determine the value of the multiplier for this economy, and find the equilibrium value of Y.