Suppose autonomous government spending increases by $100 billion and the value of the MPC is 0.6. Use the following table to compute four rounds of the spending multiplier effect. New Consumption Spending Round Components of Total Spending (Billions of dollars) 1 Investment Consumption 3 Consumption Consumption After an infinite number of spending-output-spending rounds, the total change in real GDP resulting from the $100 billion increase in governr spending is S billion.

Suppose autonomous government spending increases by $100 billion and the value of the MPC is 0.6. Use the following table to compute four rounds of the spending multiplier effect. New Consumption Spending Round Components of Total Spending (Billions of dollars) 1 Investment Consumption 3 Consumption Consumption After an infinite number of spending-output-spending rounds, the total change in real GDP resulting from the $100 billion increase in governr spending is S billion.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In each of the following cases, calculate the values of MPC, MPW, and the spending multiplier. Enter your responses below rounded to 2 decimal places. a. A $2 million increase in Income leads to a $700,000 rise in consumption on domestic items. MPC is therefore and the spending multiplier is b. A $10 million decrease in income results in a $3 million drop in consumption on domestic Items. MPC is therefore and the spending multiplier is c. A $10 million decrease in income causes a $9 million drop in withdrawals. MPC is therefore spending multiplier is MPW IS MPW IS MPW IS and the
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An economy has neither imports nor income taxes. The MPC is 0.75 and the real GDP is $120 billion. The government increases expenditures by $4 billion. The multiplier is and the change in real GDP from the increase in government expenditures is billion.
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Below is some data for a hypothetical economy: C = -232 + 0.8Y XN = 107 - 0.1Y I = 100 T = 340 G = 340 Refer to the information above to answer this question. What is the value of the expenditure multiplier? a. 1.43 b. 4 c. 3.33 d. 2.43
= 450 + 0.4Y I = 350G = 150X = 70Z = 35 + 0.1Y T = 0.15YYf = 1550Q.2.1 Calculate the level of autonomous spending in this economy.(2)Q.2.2Calculate the size of the multiplier(Note: Round your answer to two decimal places)(4)Q.2.3Calculate the equilibrium level of income (Hint: use the multiplier method)(2)© The Independent Institute of Education (Pty) Ltd 2020Page 6 of 10 202020Q.2.4Q.2.5Q.2.6Question 3Calculate the tax revenue to the government of this country when the economy (2) remains in equilibrium.Calculate what the new equilibrium income should be if the government of this (6) country decides to cancel all taxes, implying the tax rate would now be 0%.Before the government decreased the tax rate, how much of government spending was required to bring the economy to full employment?
Given an economy is currently producing at $1.2T rGDP, natural rGDP is $1.3T, and the MPC is 0.9, then the multiplier for increases in aggregate expenditures is: 10 A (whole number, no decimals). This means the federal government should increase its expenditures by A (whole number) billion dollars.
Government expenditures represents one of the injections of expenditure. Explain how an increase in government spending may have a multiplier effect in the economy.
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