The MPC for an economy is?
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Assume that a hypothetical economy with an MPC of 0.9 is experiencing severe recession. By how much would government spending have to increase to shift the aggregate demand curve rightward by $40 billion?How large a tax cut would be needed to achieve...
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Other solutions
8.An Economy has no imports or taxes, the MPC is 0.90 and real GDP is $12 trillion. If businesses increase investment by $0.1 trillion: 8a. Calculate the multiplier? 8b. Calculate the change in real GDP? 8c. Calculate the new level of real GDP?
Answer:
8a multiplier=1/1-.9=1/0.1=10. 8bThe change in real GDP= 0.1x10=10 trillion. 8c GDP=12+10=22trillion...
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Answer:
If the MPC in an economy is .8 government could shift the aggregate demand curve rightward by $100 billion...
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Answer:
MPC stands for "marginal propensity to consume" when you are talking about an economy.
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Answer:
This is an interesting thought on how the government should balance the economy in case of a MPC drop...
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Answer:
I apologize. I understand your question, but I'm quite confused about having to figure out the tax cut...
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Answer:
If MPC = 0.8, then the government spending multiplier is 5 (= 1/(1-0.8)).The multiplier associated with...
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these are the choice a. 1 billion b. .9 billion c. 10 billion d. 9 billion i'm having hard time figuring this problem out for macroeconomics. if someone can help me understand it, it would be a big help. please show me how you reached the answer. thanks...
Answer:
Jenkins' answer is wrong because it ignores the multiplier effect. The $1bil fiscal injection will add...
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