Assume the current equilibrium level of income is $200 billion as compared to the full-employment income level of $240 billion. If the MPC is 0.625, what change in aggregate expenditures is needed to achieve full employment? Multiple Choice a decrease of $12 billion an increase of $25 billion an increase of $10 billion an increase of $15 billion

Assume the current equilibrium level of income is $200 billion as compared to the full-employment income level of $240 billion. If the MPC is 0.625, what change in aggregate expenditures is needed to achieve full employment? Multiple Choice a decrease of $12 billion an increase of $25 billion an increase of $10 billion an increase of $15 billion

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 6SQP

See similar textbooks

Similar questions

Assume the current equilibrium level of income is $200 billion as compared to the full-employment income level of $240 billion. If the MPC is 0.625, what change in aggregate expenditures is needed to achieve full employment? Multiple Choice an increase of $10 billion a decrease of $12 billion an increase of $25 billion an increase of $15 billion
Assume the current equilibrium level of income is $200 billion as compared to the full-employment income level of $240 billion and that consumption is the only component of aggregate expenditures that depends upon the level of GDP. If the MPC is 5/8, what change in aggregate expenditures is needed to achieve full employment?
If the autonomous expenditure by the government increases by 7000 and the MPC is 0.2 find the level of new income in the economy
suppose the government in this economy decides to decrease government purchases by 300 billion decrease in government purchases will lead to a decrease in income generating an initial change in consumption equal to
Which of the following will increase consumption spending? Group of answer choices a housing market crash an increase in the personal income tax rate a boom in the stock market an increase in the nominal interest rate
If disposable income is 85 per cent of national income, the marginal propensity to consume (out of disposable income) is 0.7, and imports are 22 per cent of national income, then the marginal propensity to spend on national output is:
If the MPC is 0.8 and investment increases by $3 billion, the equilibrium GDP will increase by $15 billion. increase by $2.4 billion. decrease by $3.75 billion. increase by $3.75 billion.
The desired aggregate expenditure function of an economy is illustrated in the graph to the right. The dashed line, Y*, shows the potential level of national income in this economy. The marginal propensity to spend is 0.75. Use the point drawing tool to plot and label the equilibrium level of income. Carefully follow the instructions above, and only draw the required object. Desired Aggregate Expenditure ($ billions) 3,750- 3,000- 2,250- 1,500+ 750 500 0- Aggregate Expenditure Function 0 45 line AE Y = 3,000 4,000 1,000 2,000 3,000 Actual National Income ($ billions)
If the MPC in an economy is 0.9, a $4 billion increase in government spending will ultimately increase consumption by
Given the necessary increase in GDP of $360 and the MPC of 0.70, how much should we reduce taxes to get GDP to its natural rate?
Assume taxes are zero and an economy has a consumption function of C = 0.89 (Yd) + $299.19. How much consumption takes place if disposable income is equal to 4,848.76? Round your answer to two digits after the decimal.
Equations for C, I, G, and NX are given below. If the equilibrium level of GDP is $32,000, what will the new equilibrium level of GDP be if government spending increases to 2,500?C = 5,000 + (MPC)YI = 1,500G = 2,000NX = -500