The Keynesian multiplier relationship Y = 1/ (1-c) is derived from two initial equations: Y = C + I and C= cY. For the multiplier relationship to be acceptable, a. the initial two equations must be acceptable b. saving must be negative c. the algebraic derivation must be correct d. all individuals must receive the same income
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The Keynesian multiplier relationship Y = 1/ (1-c) is derived from two initial equations: Y = C + I and C= cY. For the multiplier relationship to be acceptable,
a. the initial two equations must be acceptable
b. saving must be negative
c. the algebraic derivation must be correct
d. all individuals must receive the same income
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- When income is zero within the Keynesian cross model planned expenditure will be greater than zero and the intercept of the consumption function will hence not be zero either. The reason for this feature of the model is that either: The Marginal Propensity to Save (MPS) is greater than 0.5 The Marginal Propensity to Consume (MPC) is greater than 0.5 Autonomous consumer expenditure depends only on the level of national income Autonomous consumer expenditure does not depend on the level of national incomeOnly one answer can be correct. Please pick one and explain your reasoning.In the Keynesian cross model, assume that the consumption function is given by C = 20 + 0.8(Y- T). Planned investment is 200; government purchases and taxes are both 400. There is no foreign trade. An economist has claimed that the full employment level of output is 2,400. How much should the government expenditure or taxes rise or fall to achieve full employment?In the Keynesian-cross analysis, if the consumption function is given by C=100+0.6(Y-T),and planned investment is 100,G is 100, and T is 100,then the equilibrium Y is: Select one: a. 400 b. 350 c. 750 d. 600
- According to Keynes's Consumption function, a) Consumption spending is a function of disposable (after-tax) income (Yd). b) There cannot be any consumption without disposable income. c) Total consumption spending is composed of autonomous consumption, independent of income (Ca), and induced consumption, determined by disposable income. d) The induced consumption component is equal to a constant proportion of disposable income. e) The induced consumption is equal to the marginal propensity to consume times disposable income f) The consumption function Is modified in the Lecture Notes to a simplified version where consumption is a function of real income. g) Autonomous consumption cannot be changed by other factors.What happens to savings when the consumption function lies above the 45° line. (hint: Keynesian model). Select one from the following options. negative positive decreasing increasing10 . In the “complete Keynesian model”, the investment functions was I = I0 - f(i). An analyst now proposes the following investment function: I = I0 - f(i) + qY, where “q” is a parameter and Y is national income = GDP. Provide two different arguments, i.e. explanations as to why this investment function makes sense. The focus is on the new term, qY (q times Y), in the function.
- If the Keynesian consumption function is C = 100 +0.75Y4 and there is no investment then, when disposable income is 500, what is the average propensity to consume? Round your answer to 2 decimal places e.g. 2.22In the Keynesian cross model, assume that the consumption function is given by C = $220 + 0.7(Y – T) Planned investment is $50; government purchases and taxes are both $100. d. What level of government purchases is needed to achieve an income of $1080? Assume taxes remain at $100. G=$ e. What level of taxes is needed to achieve an income of $1080? Assume government purchases remain at S100.In a closed economy Keynesian-cross framework, I = 20, c0 = 20, and MPC = 0.6. a) Show in a diagram how a halving of investment will lead to a fall in income. b) Show the same mathematically. c) Explain in words includes the role of (i) the multiplier and (ii) inventories in this
- If the Keynesian multiplier is defined as 1/ (1-c) where c is the proportion of income that is consumed, then when c increases, a. the multiplier decreasesb. income declines c. the multiplier increases d. investment increasesConsider the Keynesian consumption function Yt =B₁ + B₂x2t + εt ( where yt is per capita consumption, and x2+ is per capita income. The coefficient B₂ is interpreted causally as the marginal propensity to consume, and we expect 0Which of the following statements about the Keynesian framework are accurate? a)Keynes posited a linear Consumption function C=Ca + mpcYd, where C is total desired consumption spending, Ca is consumption spending independent of income and Yd is disposable income and mpc is marginal propensity to consume b) In the C=Ca +mpcYd the Ca is the vertical axis intercept parameter, and mpc is the slope parameter. c) Keynes also posited that Investment spending was a function of expectations and the interest rate. d) In the Keynesian investment function the firm's estimated profitability of potential investment projects were determined by expectations of future sales and costs. e) Businesses would invest in those projects whose estimated profitability was greater than the market rate of interest. f) If the firms don't have the cash, they will borrow funds and earn the difference between the rate of return on the project and the lower market rate of interest. If they have more cash than needed…SEE MORE QUESTIONS