Refer to the information provided in Figure 20.1 below to answer the questions that follow. Ou Figure 20.1 11) Refer to Figure 19.1. The open economy multiplier is A) 1.25. B) 2
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- a)What will the multiplier be given the MPS values below? Fill in the table with your answers. Instructions: round your answers to 2 decimal places. MPS Multiplier 0.0 0.4 0.5 1.0 b) What will the multiplier be given the MPC values below? Fill in the table with your anwers. MPC Multiplier 1.0 0.9 0.75 0.5 0 c) How much of a change in GDP will result if firms increase their level of investment by $ 8 billion and the MPC is 0.80? ( Enter your answers as whole numbers) How much of a change in GDP will result if firms incresese their level of investment by $ 8 billion and the MPC instead is 0.67?Problem 8. What will the value of multiplier when (i) MPC = 1, (ii) MPC = 0, (iii) MPC = MPS? %3Drefer to the following table: Consumption expenditure (C)= 100+ 0.8 Yd Investment expenditure (1) = 120-500/ Government spending (G)-50 Money demanded for Asset purpose = 100-2000 i Money demanded for transaction purpose- 60+0.1 Y Money demanded for precautionary purpose 40 Where i is the interest rate, Y is the real GDP; Yd is the disposable income Suppose Grises by 100 S because of increased expenditure on education. What is the new equilibrium Y? 4600 2444 1444.44 1131.148 2000 Taxes 0.1 Y Current account 0 Demand deposits 60 Saving deposits 30 Currency in circulation-10 Banks reserves-20
- Consider the following closed economy model: C=500+0.2(Y-T)I=200G=100T=100+0.1YDerive the closed economy multiplier.Assuming there is no government or foreign sector, if the multiplier is 5, the MPC is Select one: a. 0.4. b. 5. C. 0.8. d. 0.5.With an MPC of 90, what would you expect to be the total impact on spending/incomes from the construction of a $4 million facility in a city? choose correct one- 1)$8 million 2)$40 million 3)$ 50 million 4)$10 million
- 39. An open economy is defined by C-100+0.8(Y-T) I=400 X=0.3Y* IM=0.3Y T=1000, G-1000, Y*=1000 The multiplier of this economy is: A) 5 B) 2 C) 1.2 D) None is correctIf the multiplier is 5, then the MPC is 0.05 0.5 0.6 0.8Suppose the consumption function is C= $400 billion + 0.9 Y and the government wants to stimulate the economy. By how much will aggregate demand at current prices shift initially (before multiplier effects) with Instructions: Enter your response as a whole number. (a) A $60 billion increase in government purchases? $ billion Instructions: Enter your responses rounded to one decimal place. (b) A $60 billion tax cut? $ billion (c) A $60 billion increase in income transfers? $ billion What will the cumulative AD shift be for (d) The increased government spending? $ billion (e) The tax cut? $ billion
- Given the consumption function below determin the MPC Point on curve A B E $ 0 $300 Ya (billions) 500 1,000 1,500 2,000 C (billions) 700 1,100 1,500 1,900 $2,000 Consumption function 1,500 AC= $400 %3D 1,000 CAYd $500 %3D B 500 300 A $500 1,000 1,500 2,000 Disposable personal income per period (billions of dollars) Consumption per period (billions of dollars)If the MPC is 0.75, then the multiplier is 4. Select one: True FalseThe cost of rebuilding the Philippines after typhoon Haiyan could reach USD 5.8bn”, a senior official has said. Assume the government of Australia Department of Foreign Affairs and Trade provided a grant of USD 5.8 billion. Also assume that despite the hardships the Philippine families experienced, 15% was the beneficiary savings from the Australian grant. Further, assume all other factors remain constant.a. Calculate the total effect of the spending multiplier of the Australian government grant on the Philippine economy GDP growth. b. Examine the overall multiplier effect of the USD5.8 billion grant on the Philippine economy. Answer asap n correctly with proper typed explanation
