Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 30, Problem 5SPPA
To determine
To compute:
The equilibrium expenditure and the multiplier when the investment crashes to $0.55 million.
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Explain the basic idea of the expenditure multiplier and the role consumers' play.
Suppose that an initial $ 10 billion increase in investment spending expands GDP by $ 10 billion in the first round of the multiplier process. Also suppose that GDP and consumption both rise by $ 6 billion in the second round of the process.
Instructions: In parts a and b, round your answers to 1 decimal place. In part c enter your answer as a whole number.
A) What is the MPC in this economy?
B) What is the size of the multiplier?
C) If, instead, GDP and consumption both rose by $ 8 billion in the second round, what would have been the size of the multiplier?
During 2019, a country reported that its real GDP increased by $3.0 billion. The multiplier for this economy is known to be equal to 10.Which of the following might have caused the increase in real GDP?
Question 12Answer
a.
Exports increased by $0.3 billion.
b.
Investment decreased by $0.3 billion.
c.
Exports decreased by $0.3 billion.
d.
Imports increased by $0.3 billion.
e.
Government expenditure on goods and services increased by $3 billion.
Chapter 30 Solutions
Foundations of Economics (8th Edition)
Ch. 30 - Prob. 1SPPACh. 30 - Prob. 2SPPACh. 30 - Prob. 3SPPACh. 30 - Prob. 4SPPACh. 30 - Prob. 5SPPACh. 30 - Prob. 6SPPACh. 30 - Prob. 7SPPACh. 30 - Prob. 8SPPACh. 30 - Prob. 9SPPACh. 30 - Prob. 1IAPA
Ch. 30 - Prob. 2IAPACh. 30 - Prob. 3IAPACh. 30 - Prob. 4IAPACh. 30 - Prob. 5IAPACh. 30 - Prob. 6IAPACh. 30 - Prob. 7IAPACh. 30 - Prob. 8IAPACh. 30 - Prob. 9IAPACh. 30 - Prob. 10IAPACh. 30 - Prob. 1MCQCh. 30 - Prob. 2MCQCh. 30 - Prob. 3MCQCh. 30 - Prob. 4MCQCh. 30 - Prob. 5MCQCh. 30 - Prob. 6MCQCh. 30 - Prob. 7MCQCh. 30 - Prob. 8MCQ
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