The table shows real GDP, Y, the components of planned expenditure,and aggregate planned expenditure (in millions of dollars) in an economyin which taxes are constant.Calculate the marginal propensity to consume and the marginalpropensity to import. What is equilibrium expenditure?>>> Answer to 1 decimal place.The marginal propensity to consume isPlanned expenditureYCGXMAE02.01.75 1.0 1.250.06.02Q1.751.01.250.46.844.41.751.01.250.87.665.61.751.01.251.28.486.81.751.01.251.69.2108.01.751.01.25U10.0129.21.751.01.252.4 V

Computing MPC; Marginal propensity to consume (MPC) is the change in consumption in response to a…

Answered: The table shows real GDP, Y, the…

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section: Chapter Questions

Problem 7TY

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Solve for (i) Equilibrium income and (ii) Income-expenditure multiplier for G
Explain the basic idea of the expenditure multiplier and the role consumers' play.
Consider the graph below: Planned Aggregate Expenditure (PAE, billions of $) 1000 900 800 700 600 500 400 300 200 100 0 100 200 300 400 500 600 700 800 1 PAE 2 PAE Y PAE₁ 900 1000 Actual Aggregate Expenditure (Output or GDP, billions of $) a. What is the expenditure multiplier in this economy? b. What is the marginal propensity to consume in this economy?
Question 3 of 16 Income and consumption changes for five people are shown in the table. Given this information, rank the marginal propensities to consume (MPC) for the five people from largest to smallest. Largest MPC Smallest MPC Answer Bank Bert Doug Eli Carter Al Name Income change Consumption change Al +$5,000+$5,000 +$3,000+$3,000 Bert +$2,500+$2,500 +$800+$800 Carter +$1,000+$1,000 +$800+$800 Doug −$2,500−$2,500 −$1,750−$1,750 Eli −$5,000−$5,000 −$2,000−$2,000
stlon 16 Troll Island is a small island nation that recently experienced an autonomous change in aggregate expenditures (AE). AE increased by 2 billion, and the marginal propensity to consume on Troll Island is equal to 0.6. What is the change in Troll Island's real GDP after the increase in AE? Enter your answer in billions of dollars, rounded to one place after the decimal. For example, an answer of $2,500,000 should be entered as 2.5. %24 billion
6 If the marginal propensity to consume (MPC) is 0.40, the expenditure multiplier will be equal to _______ . (Enter your answer using ONE decimal place)
18. What will be the level of consumption spending at an income level of 36? a) 30 b) 24 c) 28 d) 16 e) 8
In each of the following cases, calculate the values of MPC, MPW, and the spending multiplier. Enter your responses below rounded to 2 cecimal places. a. A $6 million increase in income leads to a $900,000 rise in consumption on domestic items. MPC is therefore and the spending multiplier is , MPW is b. A $8 million decrease in income results in a $0.8 million drop in consumption on domestic items. MPC is therefore and the spending multiplier is |. MPW is c. A $4 million decrease in income causes a $3.2 milion drop in withdrawals. MPC is therefore 1. MPW is and the spending multiplier is
O Macmillan Learning The graph shows the income-expenditure model for the country of Desireland, where AE represents aggregate expenditure. The Desirish government wants to stimulate the economy owing to a slowdown in economic activity and, as such, decides to increase infrastructure spending by $7.65 billion. Show the impact of this extra spending given a marginal propensity to consume (MPC) of 0.7 and a total tax take of 30%, for any changes in GDP. In this example, assume that there is no international trade or inflation, and that interest rates are fixed. Planned aggregate spending (in billions of dollars) 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0 0 01- 5 10 15 20 25 30 35 40 45 50 Real GDP (in billions of dollars) 45 degree line A new socialist government is elected to Desireland and decides to increase direct spending even more, to total of $9.7 billion. What will be the total change in real GDP? Please provide the answer to the nearest whole billion. Planned AE 55 60 65 70…
y Tools ips ps « CENGAGE MINDTAP Homework (Ch 15) Consider a hypothetical closed economy in which households spend $0.80 of each additional dollar they earn and save the remaining $0.20. The marginal propensity to consume (MPC) for this economy is, and the spending multiplier for this economy is Suppose the government in this economy decides to increase government purchases by $400 billion. The increase in government purchases will lead to an increase in income, generating an initial change in consumption equal to This increases income yet again, causing a second change in consumption equal to The total change in demand resulting from the initial change in government spending is The following graph shows the aggregate demand curve (AD₁) for this economy before the change in government spending. Use the green line (triangle symbol) to plot the new aggregate demand curve (AD2) after the spending multiplier effect takes place. Hint: Be sure that the new aggregate demand curve (AD2) is…
O Use the information in the following table to do exercises 8-15: 948 Y C $120 $300 $480 $700 sin $660 $100 $300 $500 JAZI I $20 $20 $20 $20 G $30 $30 $30 $30 X $10 -$10 -$30 -$50 1
Chapter 14 Explain the basic idea of the expenditure multiplier and the role consumers play.

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