What can we predict about the effect on consumption of an increase in government spending? A) Consumption will increase by an amount equal to the MPC times the change in real GDP. B) Consumption will increase by an amount equal to the MPC times the change in government spending. C) Consumption will increase by the amount of the government spending. D) Consumption will not rise as government spending rise

What happens to the real GDP if the government increases spending by $50 million and the government multiplier is 1.5?

The government spends an additional $926 billion and the marginal propensity to consume is 66%. How much will GDP increase due to this additional government spending? Enter your answer in billions and round to two decimal places.

Suppose the government reduces taxes by 50,000,000, that there is no crowding out, and that marginal propensity to consume is 0.9. What is the total amount of additional economic activity that results from this tax cut?

An Economy has no imports or taxes, the MPC is 0.90 and real GDP is $12 trillion. If businesses increase investment by $0.1 trillion: 1. Calculate the multiplier? 2. Calculate the change in real GDP? 3. Calculate the new level of real GDP?

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. Y S I AE 500 0 750 1,500 2,250 3,000 3,750 с 500 1,000 0 750 b. The value of expenditures equilibrium is $ c. The value of the multiplier is

If the level of autonomous expenditures in the economy is $640 b, and the mpe = .8, what is the equilibrium level of GDP? 2

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1.  If an economy has an MPC of 0.9 what is the multiplier? 2. If an economy has an MPS of 0.2 what is the multiplier? 3. If an economy has an MPC of .08 and the government needs to close a recessionary gap of 20 Billion dollars how much government spending should occur? 4. If an economy has an MPS of .05 and the government needs to close an inflationary gap of 10 Billion dollars how much should government spending decrease?

GDP, Billions Consumption, Billions $100 $120 200 200 300 280 400 360 500 440 600 520 700 600 c. Now suppose a proportional tax with a 10 percent tax rate is imposed instead of the regressive tax. Calculate and graph the new consumption schedule, and calculate the MPC and the multiplier.