d. Given C and I above, if government increases both G and T by 30, calculate equilibrium Y. e. Given Cand l above, if government only increased G by 30 (no change in T), calculate equilibrium Y. Given C and I above, if government only increased T by 30 (no change in G), calculate equilibrium Y. g. Why does the increase in G have a larger the effect on Y than the same increase in tax in absolute f. value terms?
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- The closed economy of Sokovia has a GDP of 150 billion dollars and a marginal propensity to save of 02. In the closed economy of Madripoor the GDP is 160 billion dollars and the marginal propensity to save is 0 25 We can infer that 6. Select one answer: O It takes Sokovia an injection of 10 billion dollars to reach a GDP of 200 billion dollars O The multiplier in Madripoor is 6. O The multiplier in Sokovia is 4. O It takes Madripoor an injection of 12 billion dollars to reach a GDP of 200 billion dollars.Consider this economy: C = 100 + 0.5Y |= 400 + 0.1Y Drag and drop options on the right-hand side and submit. For keyboard navigation... SHOW MORE V Marginal propensity to consume 1000 Multiplier 0.5 Income of equilibrium 500 Consumption of equilibrium 1250 Investment of equilibrium 2.5 600 525 725 II II II II II II II II IIass Activity i Saved The following are the parameters for the simple economy of Minnerva, which has no government involvement and no international trade. C 1,360+0.60Y 1=1,450 a. The value of expenditures equilibrium is S b. The value of the multiplier is Round your answer to 3 decimal places. c. If investment increases by 380, the new value of expenditures equilibrium is $
- 2. Consider an economy that is characterised by the following set of equations: C co + c¡Yp Yp Y – T I bo + bịY Government spending (G) and taxes (T) are constant. Note that investment (1) 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? c) For the multiplier to be positive what condition must be satisfied? Please note: The two questions are equally weighted in terms of marks. To help explain your answers and analysis, you should always attempt to use diagrams, mathematical demonstration where applicable and convey the economic intuitions behind the results. Do not forget to label your graphs. Key Marking criteria will include: • Initiative: Originality, innovativeness of answer • Assignment Structure: Clarity of aims, objective, structure and presentation • Quality of Writing: Readability and ability to convey…1. Supposs economy that un C = 100+0.8 I =70 G =200, TR=150, t =0.20 (a alculati eguilibrium leuel of inomo and multiplier (b) Calculati budgit ourplus (C what will be the new equilibrium income and new multiplur G) Deriu the r ik t increases to O.25. balanced budg et multiplier. (111) Undur what circums tances can the LM Cure be horizontal 9 Use a diagram also. treuerWhat is the formula for the marginal propensity to expend? A aggregate expenditures/A national income O b. A autonomous expenditures/A national income O a. O c. A consumption/A national income O d. A national income/A induced expenditures
- We found that for every $1 increase in G there is a multiplied impact on output with, in the most 1 basic model, a multiplier of A study by economists at the New York Fed conducted 1- MPC during the COVID-19 recession found that "as of the end of June 2020, a relatively small share of stimulus payments-ljust] 29 percent-was used for consumption." What is the G multiplier based on that estimated MPC and the formula from the basic model?9 swered t of 1.00 uuestion Refer to the information provided in Figure 8.11 below to answer the questions that follow. Aggregate expenditures ($ millions) 200 50 Figure 8.11 0.0 45° AE 200 Aggregate output ($ millions) Refer to Figure 8.11. A $10 million decrease in autonomous consumption Select one: O a. changes equilibrium output to $120 million. b. increases the MPS. c. changes equilibrium expenditure to $160 million. d. increases the MPC.Moving along the aggregate supply curve, O the real wage rate is constant. O technology advances. O only the price level changes. O the stock of human capital increases. O the quantity of capital used increases.
- 3 bok t ces The simple economy of Altria shown in the table below has no government or taxes and no international trade. Its investment is autonomous and its MPC is constant. a. Complete the table below. Remember to use a minus (-) sign to indicate negative values. AE Y S I 200 0 400 800 1,200 1,600 2,000 C 200 500 800 1100 1400 1700 0 -200 -100 100 200 300 b. The value of expenditures equilibrium is $ c. The value of the multiplier isQuestion 12 The key explanation for the multiplier effect lies in: O Households are assumed to spend on consumption only part of any additional income they receive. O Households are assumed to invest only part of their savings when their incomes rise. Investment expenditures increase as national income increases. O None of the above.QUESTION 8 Which of these is positively related to the size of the multiplier? O a. The marginal propensity to consume O b. The marginal utility of money OC. The marginal tax propensity Od. The marginal propensity to save