Answered: 2. If a $580 billion initial increase…

2. If a $580 billion initial increase in spending leads to a $10850 billion change in real GDP. how big is the multiplier?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: If GDP is $3,400 billion, the multiplier is 5, and I rises by 15, what is the new level of GDP? The…

A: GDP is the value of final goods and services produced in the economy within a given period of time.

Q: i. What is the accelerator effect ii. Explain the difference between the accelerator and the…

A: The circular flow of the economy represents the flow of money, goods and services in the economy.…

Q: G IM AE 200 200 200 s00 400 100 500 600 -100 200 500 400 150 Refer to the data above to answer this…

A: here we calculate the value of the Multiplier and choose the correct option so the calculation of…

Q: Germany injects $100 into the United States by purchasing new software. If the spending multiplier…

A: The spending multiplier means initial rise in the expenditure causes multiple rise in the income…

Q: Income and Expenditure Work It Out: Question 4 of 4 Recall that the consumption function is C = $100…

A: Equilibrium in the economy is reached where planned aggregate spending is equal to income.

Q: Multiplier Effect a. During a recessionary gap, is the goal to increase or decrease the equilibrium…

Q: In an economy investment increases by 120 billion. The value of multiplier is 4. Calculate MPC.

A: Below is the given values: Increase in the investment = 120 billion Multiplier = 4 MPC = ?

Q: The following table shows income (Y) and consumption (C): Y C Calculate: 100 105 125 160 I. Marginal…

A: Y C 100 105 125 110 160 125 200 140 Formula's Used: MPC = ∆C∆Y MPS = ∆S∆Y Y = C +…

Q: based on macroeconomic theory, one of the following four answers is a correct description of the…

A: The expenditure multiplier depicts the effects of changing autonomous spending on overall spending…

Q: In a closed economy with no government, a $1 billion increase in initial spending leads to a $5…

A: Multiplier effect occurs when change in aggregate spending leads to larger percentage change in Real…

Q: You are given the following model that describes the economy of Hypothetica. Consumption function: C…

A: Equilibrium in the economy reaches where aggregate expenditure equals total production

Q: 1. Your friend just got an unexpected $1500 tax refund. She plans to put $800 toward paying off…

A: Answer; MPC = Increase in consumption / Increase in income = $100 / $1,000 = 0.1

Q: a. By how much will GDP change if firms increase their investment by $11 billion and the MPC is 0.8?…

Q: how do we connect the MPS, MPC, spending multiplier and total change?

A: The multiplier effect describes the impact of an initial change in spending or investment on the…

Q: 800 REAL EXPENDITURE (Billions of dollars) 500 400 X 300 200 Potential GDP 700 600 100 100 45-degree…

A: The summation of countries' goods and services produced is called its gross domestic product. GDP…

Q: Explain how the multiplier affects equilibrium real GDP. Give examples

A: When talking about multiplier in economics, it can be said that it is the change in one variable due…

Q: .Use the multiplier applicable to export,to explain how a100–billion decline in demand for export…

A: Export is the selling the commodities in the foreign market manufactured within the country’s…

Q: Use the diagram to answer the question which one of the following will increase the size of the…

A: Multiplier is a factor by which income changes when there is a change in spending.

Q: Suppose the households in a hypothetical economy has the following consumption function C = a +cYd…

A: consumption is the function of disposable income where marginal propensity to consumer is the slope…

Q: In order for the economy (GDP) to be grow and take advantage of the multiplier effect, which one of…

A: As a particular product is manufactured, cost is initiated and process of business is started.…

Q: If GDP is 3,900, the multiplier is 8, and G falls by 10, wha New GDP is $ billion.

A: Multiplier effect shows that the change in GDP will be greater than the change in spending that has…

Q: In an economy the change in income is $2300 and change in investment is $700 What will be the…

A: We know that investment multiplier can be calculated as Investment multiplier = change in income /…

Q: Use the table below to answer the following questions. Expenditure $B Consumption 1440 Investment…

A: Aggregate expenditure is the sum of consumption, investment, government expenditure and net exports.…

Q: 22. Suppose economists observe that an increase in government spending of $10 billion raises the…

A: Solution - Given - Government spending =$10 billion Demand for Goods and service = $50 billion We…

Q: HOW DOES GOVERNMENT SPENDING AFFECT THE LEVEL OF AGGREGATE AUTONOMOUS SPENDING , THE MULTIPLIER AND…

A: The multiplier effect refers to the theory that government spending intended to stimulate the…

Q: n an economy investment increases by 120 crores. The value of multiplier is 4. Calculate the…

A: Increase in investment = 120 crores. Value of multiplier = 4

Q: An Economy has no imports or taxes, the MPC is 0.90 and real GDP is $12 trillion. If businesses…

A: Answer:Given values:

Q: Do not use chatgpt

A: A. Completed table:Remember the formulas:C = a + MPC x Ya = autonomous consumptionThis is the value…

Q: If the marginal propensity to consume (MPC) increases. A. The MPS increases B. The multiplier…

A: here we can find the correct answers as follow-

Q: Consider the multiplier model. Compare two economies, which differ only in the share of…

A: The multiplier model in economics used to understand the magnified impact of an initial change in…

Q: Suppose that Kim K decides to spend $30,000 on an American‑made purse instead of donating it to…

A: The GDP multiplier indicates the amount of change in eth GDP of the economy which happens due to the…

Q: 2. If a $440 billion initial increase in spending leads to a S8050 billion change in real GDP, how…

A: So here we calculate the Multiplier value by using the Real GDP and Income so the calculation of the…

Q: . Calculate

A: Marginal propensity to consume (MPC) is being defined as the share of additional income which a…

Q: THE AGGREGATE EXPENDITURE MODEL (IN THE SHORT RUN)YOU MUST SHOW YOUR CALCULATIONS IN THE SPACE…

A: Given: Initial equilibrium output = $13 trillion Government increases its spending to $2.7 trillion…

Q: Aggregate Expenditures and Multipliers Assignment a. Using the aggregate expenditure function…

A: Answer: (a). The current level of real GDP is that where the 45-degree line and the aggregate…

Q: ECONOMICS .In an economy, total savings are $2000 crore and the ratio of Average Propensity to Save…

A: we can calculate the level of income by using APS and APC which are as follow-

Question

2. If a $580 billion initial increase in spending leads to a $10850 billion change in real GDP, how big is
the multiplier?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

3. When the following event occurs, the change in Real GDP = Event: The government increases its education funding by $60 billion; the marginal propensity to consume is 0.6. the multiplier.
4. a) Draw a TP-TE (or Keynesian cross) graph for South Africa. Suppose Real GDP is $425 billion while the Real GDP where TE=TP is $475 billions. total, Expenditure (billions) TE-TH HEL th I 1 45 425 Q2 475 Q1 TP - TE total Production (billions) b) If Real GDP is $425 billion, what will happen to inventories, to firm's production and to the Real GDP? Inventories will decrease and Production will increase GDP increases to $475 billion and real
Exercise 4. Imports and the multiplier. The consumption multiplier tries to capture the idea that individuals increase their consumption expenditures when their income increases, even when it is only a short-term increase and their life time income didn't change. However, individuals not only consume domestic products but also, they import part of their consumption. Therefore, if domestic consumption reacts to changes in current income, then it is natural to think that consumption of foreign goods should increase as well. For example, when the economy is booming, imports usually rise. To incorporate this channel into the model, suppose the import equation is given by Mt =āmīt + xm Ỹt Ỹt are described by equations in the previous exercise It = āƒŸt — b(R₁ − ñ) Yt, Ct =ācīt + x Ỹt Ỹt. The other categories of expenditures follow the same rules as in class. a) Derive the IS curve for this new specification. b) What is the economic explanation for why the parameter xm shows up in the…
In an economy investment in increased by $10 billion. As a result income rises by $50 billion. What is the value of multiplier?
Multiplier Effect Question, Initial investment of 2 billion and getting 9 billion in total revenue after reinvestment
K The following equations describe consumption, investment, government spending, taxes, and net exports in the country of Economika. In Economika, equilibrium GDP is equal to $. (Round your asnwer the nearest dollar.) If real GDP in Economika is currently $4,850, which of the following is true? A. There will be an unplanned decrease in inventories, and real GDP will increase next period. OB. There will be an unplanned increase in inventories, and real GDP will increase next period. OC. There will be an unplanned decrease in inventories, and real GDP will decrease next period. O D. There will be an unplanned increase in inventories, and real GDP will decrease next period. OE. There will be no unplanned change in inventories, and real GDP will stay the same next period. C=200+0.80(Y-T) 1=400 G=350 T=350 X = 100
Briefly discuss the following concepts iv. Government expenditure multiplierv. Potential output
2. Determine the multiplier and the net effect of the following autonomous changes in spending: a. An influx of $100 billion in government spending when the marginal propensity to consume is 0.75. b. An influx of $250 billion in business investment when the marginal propensity to consume is 0.5. C. An influx of $180 billion in export sales revenue when the marginal propensity to consume is 0.8.
What will be the impact on the spending multiplier if the marginal propensity to save (MPS) increases? A.The spending multiplier will increase. B.The spending multiplier will remain unaffected. C.The spending multiplier will decrease. D.The impact on the spending multiplier cannot be determined.
12.
multiplier? 3. Draw a graph representing a hypothetical economy. Carefully label the two axes, the S+ T+ IM curve, the I+G+ EX curve, and the equilibrium level of real GDP. Illustrate the effect of an increase in the level of autonomous saving.
If an economy were already at its potential GDP (ie its full-employment GDP), what would happen to the value of the multiplier? please help asap thank u