Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
20th Edition
ISBN: 9780078021756
Author: McConnell, Campbell R.; Brue, Stanley L.; Flynn Dr., Sean Masaki
Publisher: McGraw-Hill Education
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Question
Chapter 29, Problem 4RQ
To determine
The change in output due to the change in inventory.
Expert Solution & Answer
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Check out a sample textbook solutionStudents have asked these similar questions
Suppose consumption function is specified as C= $200 + 0.75Ya planned investment is $600, net taxes are $400, and
government spending totals $500 of a hypothetical economy in 2020. Find algebraically: LO 3
A. The equilibrium level of aggregate output by equating aggregate output and planned aggregate expenditure.
B. Consumption when aggregate output is at the equilibrium level.
C. Saving when aggregate output is at the equilibrium level.
D. Establish that leakages equal injections at the equilibrium level of aggregate output.
Which of the following changes in personal income tax would lead to the smallest increase in
consumption?
O a.
O b. a $15 000 decrease in taxes, if MPC equals
0.6
O c.
a $30 000 decrease in taxes, if MPC equals
0.25
Oe.
a $20 000 decrease in taxes, if MPC equals
0.5
O d. a $12 000 decrease in taxes, if MPC equals
0.75
a $10 000 decrease in taxes, if MPC equals
0.2
Refer to the table. Equilibrium GDP is:
Government
Purchases
Consumption (after
taxes)
$-20
Gross Investment
Net Exports
Real GDP
$15
$10
10
$+5
$0
0.
+5
15
10
20
10
+5
15
40
40
10
+5
15
70
60
10
+5
15
100
80
10
+5
15
130
100
10
+5
15
160
$40.
O $70.
O $100.
O $130.
$160
O O O O O
Chapter 29 Solutions
Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
Ch. 29.2 - Prob. 1QQCh. 29.2 - Prob. 2QQCh. 29.2 - Prob. 3QQCh. 29.2 - Prob. 4QQCh. 29.7 - Prob. 1QQCh. 29.7 - Prob. 2QQCh. 29.7 - Prob. 3QQCh. 29.7 - Prob. 4QQCh. 29 - Prob. 1DQCh. 29 - Prob. 2DQ
Ch. 29 - Prob. 3DQCh. 29 - Prob. 4DQCh. 29 - Prob. 5DQCh. 29 - Prob. 6DQCh. 29 - Prob. 7DQCh. 29 - Prob. 8DQCh. 29 - Prob. 1RQCh. 29 - Prob. 2RQCh. 29 - Prob. 3RQCh. 29 - Prob. 4RQCh. 29 - Prob. 5RQCh. 29 - Prob. 6RQCh. 29 - Prob. 7RQCh. 29 - Prob. 8RQCh. 29 - Prob. 9RQCh. 29 - Prob. 1PCh. 29 - Prob. 2PCh. 29 - Prob. 3PCh. 29 - Prob. 4PCh. 29 - Prob. 5PCh. 29 - Prob. 6PCh. 29 - Prob. 7PCh. 29 - Prob. 8PCh. 29 - Prob. 9PCh. 29 - Prob. 10P
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Similar questions
- What is the initial change in consumption if an economy's MPC is 0.75 and there is a decrease in taxes of $1 billion? O $1.75 billion O $1 billion O $1.33 billion O $0.75 billionarrow_forwardIntended Spending (billions) $2,300 $2,100 $1,900 $1,700 $1,500 The marginal propensity to consume is 01 O 19/21. O 2/3. O 5/7. 45% $1,500 $1,800 $2,100 $2,400 $2,700 Gross Domestic Product (billions) impossible to tell from the graph. Consumption plus investment Consumptionarrow_forward2. L Give Up! Suppose the Japanese economy has been experiencing slow growth. As a result, the Prime Minister, who thinks John Maynard Keynes was the greatest economist ever, has decided to increase government spending. The Prime Minister asks the head of the economic council to determine the increase in government spending necessary to bring the economy to full employment. Assume there is a GDP gap of 1 trillion yen and the marginal propensity to consume (MPC) is 0.60. What advice should the head of the economic council give the Prime Minister? O The recessionary gap is equal to 400 billion yen. O The inflationary gap is equal to 400 billion yen. O The recessionary gap is equal to 625 billion yen. O The inflationary gap is equal to 625 billion yen.arrow_forward
- Use the table below to answer the following question. Income (Dollars) 20,000 24,000 O 0.75 What is the marginal propensity to consume? O 0.875 O 0.90 Consumption (Dollars) O 1.33 18,000 21,500arrow_forwardIf real GDP is $2200 billion, the GDP deflator is 110, nominal net exports are $100 billion, nominal investment is $200 billion, and nominal government expenditures are $400 billion, what is nominal consumption? 1) $1300 2) $1500 3) $1520 O 4) $1720arrow_forwardSuppose that the level of GDP increased by $100 billion in an economy where the marginal propensity to consume is 0.5. The initial change in spending must have been: O $5 billion O $100 billion O $50 billion O $500 billionarrow_forward
- An increase in interest rates shifts the Investment Demand curve up and increases Business Investment Expenditures. O True O False Households' autonomous savings is exactly the same as autonomous consumption. O True O False An increase in households' wealth will increase the marginal propensity to consume. O True O False Private-Sector Savings equal Consumption Expenditures at the Break-Even Disposable Income. True O False In National Income Accounting, an increase in unplanned inventory increases actual business investment expenditures (la). O True O Falsearrow_forwardChange in business inventories Compensation of employees Corporate profits Durable goods Exports Social Security taxes Transfer payments Fixed investment Government spending Imports Net interest Nondurable goods Personal taxes Rental income Services In Exhibit 5-10, compute personal income (PI). Which of the following is correct? O $7,110 billion. O $7,410 billion. $6,740 billion. $7,760 billion. $6.780 billion. 50 5,400 700 600 100 360 300 950 800 150 500 2,000 1,000 200 4,000arrow_forwardFigure: Aggregate Expenditures Curve II Aggregate expenditures (per year) $800 Reference: Ref 11-16 45-degree line AE $2,000 Real GDP (per year) (Figure: Aggregate Expenditures Curve II) The slope of the aggregate expenditures curve in the aggregate expenditures model shown in this figure is: O 45 degrees. O 0.6. O 0.5. O 0.25.arrow_forward
- Suppose an economy has no imports (MPI, m = 0). The MPC (c) is 0.75 and real GDP is $120 billion. Businesses increase investment by $4 billion. The multiplier is in real GDP from the increase in investment is and the change billion. O a. 5; $16 O b. 4; $25 O C. 5; $25 O d. 4; $16 e. 0.75; $3arrow_forwardSuppose that Amazon decides to spend $10 million on a new distribution center. If the marginal propensity to consume is .8. then how much will GDP go up by once the multiplier process has played out? O $10 million O $20 million O $40 milion O $50 millionarrow_forwardQUESTION 10 Assuming that the "equilibrium income" is $4,000 and the "full-employment" income is $8,000, which means a recessionary gap of $4,000, how much change in government expenditures is needed to fill the gap if MPC is 0.50? O $3,000 O $4,000 O $1,000 O $2,000arrow_forward
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