If output is above the level of spending balance, then A income will increase. В the marginal propensity to consume will increase. C the marginal propensity to consume will decrease. income will decrease

If output is above the level of spending balance, then A income will increase. В the marginal propensity to consume will increase. C the marginal propensity to consume will decrease. income will decrease

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: 2. The marginal propensity to consume must be smaller than one. Answer: Reason:

A: Consumption refers to that part of the income which is devoted towards the consumption of goods and…

Q: The value of Marginal propensity the save is 0.28 Calculate the value of Marginal propensity to…

A: # MPC is the ratio of Change in consumption to change in income and MPS is the ratio of Change in…

Q: If the marginal propensity to save is low a. The spending multiplier will be reduced b.…

A: In an economy, the marginal propensity to save refers to the amount of additional income that is…

Q: Consider the hypothetical country of Pelee. Suppose that national income in Pelee is $30 billion,…

A: In the given question we are given with,national income(Y)= $30 billiontax(t)= $10 billion,…

Q: A country is in the midst of a recession with real GDP estimated to be $8.1 billion below potential…

Q: Which of the following describes the consumption function in the IS curve? a. C, -ā, +bR₂ Ob.Cà y c.…

A: Consumption refers to the purchase or use of goods and services by individuals, households, or…

Q: If the simple spending multiplier is 8, the marginal propensity to consume is O a. 8 1/4 wered O c.…

A: The spending multiplier represents the change in the real gross domestic product or aggregate…

Q: The partial data in the table below are for the economy of Arinaka. Planned investment, government…

A: The measure that depicts the value of all of the final services and goods that are being produced…

Q: If income level of the economy is at 50, how big an increase in autonomous expenditures is necessary…

A: Here given, Income level of the economy is at 50 At equilibrium point aggregate expenditure (i.e…

Q: Initital $10 increase in investment expands GDP by $10 in first round of multiplier process. the 2nd…

A: Aggregate Demand: The aggregate demand is a sum of private investment demand, government…

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: 24. If $1,000 of additional spending occurs and the marginal propensity to consume is 0.8, the total…

A: The marginal propensity to consume is a metric that quantifies induced consumption, the concept that…

Q: Referring to this table, calculate the marginal propensity to consume. Type your response Output…

A: Marginal propensity to consume is a measure of change in consumption because of change in income or…

Q: A country is in the midst of a recession with real GDP estimated to be $13.5 billion below potential…

A: It is given real GDP is estimated to be $13.5 billion potential GDP. MPC is 0.90

Q: suppose that the government increases taxes and government purhcases by equal amounts.what happens…

A: ∆ National Saving = ∆ Private Saving + ∆ Public Saving∆ Private Saving = ∆ Disposable Income - ∆…

Q: The the marginal propensity to import, the the multiplier. O larger; more negative O larger; larger…

A: Answer. Option C is correct Explanation movement along the supply curve will show changes only in…

Q: 5. Explain the effects of the following actions on equilibrium income, assuming that the marginal…

A: The multiplier effect states that a change in income is a multiple of a change in expenditure.…

Q: What is the effect of an increase in investment? When investment increases, O A. aggregate demand…

A: Investment is the part of aggregate demand.

Q: QUESTION 8 Which of these is positively related to the size of the multiplier? O a. The marginal…

A: In economics, the multiplier effect is the rise or fall in the outcome which results due to the…

Q: Suppose that due ot a fiscal stimulus, there is an increase in disposable incomes of $100 billion in…

A: Here, it is given that the disposable income is $100 billion from which $33 billion is spent on…

Q: The image attached, is a screen shot of the question. The question is: If the marginal propensity…

A: Please find the answer below.

Q: 30. Given this diagram; what is the mpc (marginal propensity to consume? a) 4/5 b) 20 c) – 20 d) 100…

A: Answer- Need to find- Given this diagram; what is the mpc (marginal propensity to consume Diagram-

Q: 11. If investment declines by 50 and marginal propensity to consume is 0.2, what will happen to…

A: "Marginal propensity to consumer represents the proportion of the additional dollar spent on…

Q: If inventories unexpectly rise, then production ______________ sales and firms will respond by…

A: If there is a rise in the inventories, it will be quite evident to the firms that they are producing…

Q: f the marginal propensity to consume is 0.75 and the federal government decreases spending by $200…

A: When the government makes changes in its spending decision, it has a multiplier effect on the…

Q: he Marginal Propensity to Consume (MPC) is 0,8 and the government wants total spending to increase…

A: Government spending: It refers to the spending which is done by the government at different parts of…

Q: The key explanation for the multiplier effect lies in: Households are assumed to spend on…

A: 1 c Investment expenditure increases as the national income increases In economics, the fiscal…

Q: Answer the next four questions based on the following diagn C+I+G 200 1600 Show all your work Based…

A: Given the data from the above graph we have, Autonomous consumption(a)= 200National income or GDP…

Q: Explain why the marginal propensity to save and the marginal propensity to consume sum to 1.

A: The marginal propensity to save(mps) is the change of savings due to unit change in income and the…

Q: 3. The spending multiplier effect Consider a hypothetical economy. Households spend $0.50 of each…

A: Households spend $0.50 of each additional dollar they earn It means MPC is 0.50…

Q: The Life-Cycle/Permanent Income Model of Consumption makes a different prediction from the Keynesian…

A: Keynesian model of consumption is based on MPC or marginal propensity to consume. This implies that…

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: What is the solution to the attached?

A: OPTION A - Marginal Propensity to Consume MPC = Change in Consumption/Change in Income MPC = ∆C/∆Y…

Q: Given the following table, which shows income and consumption levels for periods 1 through 7, what…

A: The link between consumer spending and the numerous factors that influence it is referred to as the…

Q: Income and consumption changes for five people are shown in the table. Given this information, rank…

A: Table -1 shows the income change and consumption change.

Q: Assume in country Y, the average marginal propensity to save is 0.2. When the aggregate income is…

A: Consumption Function:- C=a+bY Saving function:- S=-a+(1-b)Y where; a= autonomous consumption b= MPC…

Q: Marginal propensity to consume (mpc = c = AC/AY): the change in consumption expendi- ture caused by…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: A fall in mps raises the GDP multiplier. O True O False

A: In an economy, marginal propensity to save refers to the economic measure to compute the change in…

Q: The greater the MPC, Select one: a. the greater the expenditure multiplier b. there will be no…

A: (1) MPC stands for marginal propensity to consume. Expenditure multiplier = 1 / (1 -MPC) --------…

Q: Explain the effects of the following actions on equilibrium income, assuming that the marginal…

A: The multiplier effect states that a change in income is a multiple of a change in expenditure.…

Q: Allie has a marginal propensity to consume of 0.75. What does this mean? a. He's spending more…

A: When an individual earns income from making production activities, he pays some amount of income tax…

Q: The value of the multiplier is necessarily increased if a. the marginal propensity to consume…

A: The macroeconomic environment plays a significant role in influencing corporate performance, and the…

Question

If output is above the level of spending balance, then
A
income will increase.
the marginal propensity to consume will increase.
C
the marginal propensity to consume will decrease.
income will decrease.

Expert Solution

This question has been solved!

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

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

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

Explanation
Only typed answer and please don't use chatgpt Why will temporary tax increase be insignificant in reducing consumption expenditures by the amount expected a. Because viewed the tax increase as permanent. b. Because people choose to increase their savings. C become people viewed taco increases temporarily d. Consumption expenditure are not related to level of taxtation
The partial data in the table below are for the economy of Arinaka. Planned investment, government spending, and all taxes are autonomous. You may assume that the MPC, MPS, and MPM are constant. a. Fill in the blanks in table below, Unplanned Investment Y. YD AE $458 $50 $360 $40 $65 $55 $20 See 45 -5 550 600 b. The value of equilibrium income is $ c. If planned investment decreases by $20, the new value of equilibrium income is $
Pls asap
GuideLine Consumption Agg. Demand Consumption 196 56 350 490 National Income 1. Assuming that the marginal propensity to consume (MPC) equals 0.60, the size of the gap facing this economy will be: A. + 56 B. - 56 C. - 14 D. +14 2. The type of the gap is
O Macmillan Learning The graph shows the income-expenditure model for the country of Desireland, where AE represents aggregate expenditure. The Desirish government wants to stimulate the economy owing to a slowdown in economic activity and, as such, decides to increase infrastructure spending by $7.65 billion. Show the impact of this extra spending given a marginal propensity to consume (MPC) of 0.7 and a total tax take of 30%, for any changes in GDP. In this example, assume that there is no international trade or inflation, and that interest rates are fixed. Planned aggregate spending (in billions of dollars) 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0 0 01- 5 10 15 20 25 30 35 40 45 50 Real GDP (in billions of dollars) 45 degree line A new socialist government is elected to Desireland and decides to increase direct spending even more, to total of $9.7 billion. What will be the total change in real GDP? Please provide the answer to the nearest whole billion. Planned AE 55 60 65 70…
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.
How do income taxes and taxes on consumption expenditure influence the tax wedge? An increase in income taxes _______ the tax wedge, and an increase in taxes on consumption expenditure _______ the tax wedge. A. increases; increases B. increases; does not change C. decreases; decreases D. does not change; increases
Can someone please explain this to me?
4G 8:20 AM Assignment 2.. o Assignment 2 ЕCО 103 Н (Sос) Set 1: Equilibrium output 1. government. Suppose the consumption function is given by C = 100 + .8Y, while investment is given by I = 50. What is the equilibrium level of income in this case? b. What is the level of saving in equilibrium? c. If, for some reason, output is at the level of 800, what will the level of involuntary in- a. ventory accumulation be? d. If I rises to 100 (we discuss what determines I in later chapters), what will the effect be on the equilibrium income? e. What is the value of the multiplier, a, here? f. Draw a diagram indicating the equilibria in both (a) and (d). 2. Suppose the consumption behavior in problem 1 changes so that C = 100 + .9Y, while remains at 50. a. Is the equilibrium level of income higher or lower than it was in problem 1(a)? Calculat the new equilibrium level, Y', to verify this. b. Now suppose investment increases to I = 100, just as in problem 1(d). What is the ne equilibrium…
If output is above the level of spending balance, then А income will decrease. income will increase. C the marginal propensity to consume will increase. the marginal propensity to consume will decrease.