MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Question
Chapter 9, Problem 12SQ
To determine
The formula to calculate the spending multiplier.
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We have observed that consumption is 100 when income is 0 and consumption is
400 when income is 500. What is the spending multiplier?
1
2.5
3.5
4
Suppose that the MPC is .75 and the MPM is .1. What is the size of the multiplier?
Calculate MPC, MPS and the Multiplier if consumption expenditure increases by $4,000 as a result of increase in income from $40,000 to $46,000.
Chapter 9 Solutions
MACROECONOMICS FOR TODAY
Ch. 9.4 - Prob. 1YTECh. 9 - Prob. 1SQPCh. 9 - Prob. 2SQPCh. 9 - Prob. 3SQPCh. 9 - Prob. 4SQPCh. 9 - Prob. 5SQPCh. 9 - Prob. 6SQPCh. 9 - Prob. 7SQPCh. 9 - Prob. 8SQPCh. 9 - Prob. 9SQP
Ch. 9 - Prob. 10SQPCh. 9 - Prob. 1SQCh. 9 - Prob. 2SQCh. 9 - Prob. 3SQCh. 9 - Prob. 4SQCh. 9 - Prob. 5SQCh. 9 - Prob. 6SQCh. 9 - Prob. 7SQCh. 9 - Prob. 8SQCh. 9 - Prob. 9SQCh. 9 - Prob. 10SQCh. 9 - Prob. 11SQCh. 9 - Prob. 12SQCh. 9 - Prob. 13SQCh. 9 - Prob. 14SQCh. 9 - Prob. 15SQCh. 9 - Prob. 16SQCh. 9 - Prob. 17SQCh. 9 - Prob. 18SQCh. 9 - Prob. 19SQCh. 9 - Prob. 20SQ
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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 $7 million increase in income leads to a $1,750,000 rise in consumption on domestic items. MPC is therefore and the spending multiplier is , MPW is b. A $9 million decrease in income results in a $0.9 million drop in consumption on domestic items. MPC is therefore and the spending multiplier is MPW is MPW is C. A $5 million decrease in income causes a $4.5 million drop in withdrawals. MPC is therefore spending multiplier is and the esarrow_forwardCalculate the Multiplier when the MPC is 0.97arrow_forwardIn 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 thearrow_forward
- If the multiplier is 5, then the MPC is Answer 0.05 0.5 0.6 0.8 Question 43 In a certain economy, when income is $200, consumer spending is $145. The value of the multiplier for this economy is 6.25. It follows that, when income is $230, consumer spending is Answer $151.25. $166.75. $170.20. $175.00.arrow_forwardThe spending multiplier, m, is V/1- MPC). a) f the MPC is 0.9, what is the spending mutiplier? b) Now suppose government spending increases by $90 million. By how much will GDP rise? millionarrow_forwardThe spending multiplier, m, is 1/(1-MPC). a) If the MPC is 0.9, what is the spending multiplier? b) Now suppose government spending increases by $90 million. By how much will GDP rise? millionarrow_forward
- Q1. Calculate the value of multiplier when mpc is 0.5.arrow_forwardIf an economy’s spending multiplier is equal to 4, what is its MPC and MPS?arrow_forwardAs the marginal propensity to consume (MPC) increases, As the marginal propensity to save (MPS) increases, the multiplier the multiplier remains the same. remains the same. decreases. decreases. increases. increases. If the marginal propensity to consume is 0.40, what is the multiplier, assuming there are no taxes or imports? Round to the tenths place. Given the multiplier that you calculated, by how much will gross domestic product (GDP) increase when there is a $1,000 increase in government spending? Give your answer to the nearest whole number. %24arrow_forward
- The multiplier process can occur when a decrease in investment spending… a) Increases household saving, causing consumers to buy more goods and services.b) Reduces household incomes, causing consumers to buy fewer goods and services.c) Increases household incomes, causing consumers to buy fewer goods and services.d) Reduces household incomes, causing consumers to buy more goods and servicesarrow_forwardFind multiplier if MPC is 0.2arrow_forward
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