Suppose that the government increases taxes and government purchases by equal amounts. What happens to the interest rate and investment in response to this balanc budget change? Does your answer depend on the marginal propensity to consume? (

Q: -Explain the relationship between the Keynesian consumption theory and savings theory and how both…

A: Keynes law of consumption states two important points :  An increase in income is shared between…

Q: 23. Assume that Miriam's consumption function is C = a+ b(Yd), where Yd (Y – T) is disposable…

A: Given- Consumption function is C=a + b (Yd)                                Yd=Y-T so now put the…

Q: Assume that the consumption function is given by C = 150 + 0.85(Y – T) and the tax function is given…

A: Given; Consumption Function; (C)=150+0.85(Y-T) Tax function (T)= t0+t1Y where; C= consumption Y=…

Q: If the Marginal Propensity to Consume (MPC) is .90, estimate the total (multiplied) effect of…

A: Multiplier:Multiplier can be calculated as follows:

Q: a. The following information is a three sector economy of a   Consumption function (C) = 310 +…

A: (Q) The following information is a three-sector economy of a   Consumption function (C) =…

Q: 1. Find Equilibrium output/ national income with given following

A: In an open economy, equilibrium is arrived at point where Aggregate Expenditure is equal to Real…

Q: An economy has the following consumption function: C=$200+0.8DI . The government budget is balanced,…

A: The equilibrium in a macroeconomic model emerges when the aggregate demand for final goods , which…

Q: The Wilson family has a disposable income of $70,000 annually. Currently, the Wilson family spends…

A: To calculate the annual consumer spending of the family.

Q: roup of answer choices As marginal propensity to consume (b) decreases, the spending multiplier…

A: Change in consumption following change in income is called marginal propensity to consumer.

Q: Suppose the economy is in a recession. The economy needs to expand by at least $300 billion, and the…

A: Answer; = $ 90 billion

Q: Question Four Suppose that the government increases taxes and government expenditure by equal…

A: Meaning of Marginal Propensity to Consume (MPC): The term marginal propensity to consume refers to…

Q: Suppose that autonomous consumption (a) is 300, private investment spending(I) is 420, government…

A: In the Keynesian model, the aggregate expenditures or national income can be determined by using the…

Q: Consider economy T described by the parameters below: C=1500+0.6Y I = 1200 G=2500 X =500 M =…

A: Here, information about the components of aggregate demand is given.

Q: The following information is a three sector economy of a   Consumption function (C) = 310 + 0.6Yd…

A: The expenditure approach calculates GDP as total spending on the physical volume of final goods and…

Q: Suppose that Jane’s income increases from $1700 per month to $2350.  At the same time, her…

A: Imcome Consumption 1700 950 2350 1300

Q: In a closed economy (i.e. without exports and imports), the marginal propensity to save increases…

A: MPS and MPC follows certain relation MPS+MPC=1 MPS=1-MPC MPC=1-MPS

Q: Suppose a closed economy with no government spending or taxing is capable of producing an output of…

A: Given,  Output = $1700 Autonomous Consumption = $140 Intended Investment = $170 MPC = 0.50

Q: Q) For this question, assume the marginal propensity to consume is 0.7. a. Calculate the change in…

A: Public savings is the amount of savings which the government holds and Private savings is amount of…

Q: Suppose economists observe that an increase in government spending of 700 crore taka that raises the…

A: Given : Increase in government spending = 700 crore taka Increase in aggregate demand = 900 crore…

Q: The collective market capitalization of stock in American companies increased from $34 trillion at…

A: Answer: The market capitalization of stock at the end of 2019 = $34 trillion The market…

Q: Which of the following statements are correct? The introduction of government spending increases…

A: From the following, the correct statement is:

Q: What would be the value of Marginal propensity to save when the multiplier is given as 7.9

A: Given: Multiplier = 7.9 To find: The value of MPS.

Q: Assume a model where marginal propensity to save is 0.2, the marginal propensity to import is 0.1…

A: Answer: Given, Marginal propensity to save (mps)=0.2Marginal propensity to import mpm=0.1Marginal…

Q: The equilibrium level of real GDP is Rs 1,000 billion, the full employment level of real GDP is Rs…

A: Marginal propensity to consume (MPC) : it can be defined as change in consumption level due to…

Q: Consider a hypothetical closed economy in which households spend $0.70 of each additional dollar…

A: The overall demand for all services and goods in an economy is known as "aggregate demand". Consumer…

Q: Question 7 Suppose a closed economy with no government spending which in equilibrium is producing an…

A: At full employment, potential GDP is produced. Current level of output is less than potential GDP

Q: Suppose that the level of government spending increased by $100 billion where the marginal…

A: Aggregate expenditure: It means the present value of finished goods and services in the economy.

Q: Suppose the consumption function is given by C(Y)=60+0.8(Y-T) where Y represents output and T stands…

A: Given Information: Consumption function = C(Y)=60+0.8(Y-T) Investment ( I ) = 400  level of…

Q: falls by $50 billion, then disposable income will increase by________ billion and consumption…

A: The proportion of an increase in income that is spent on spending is known as MPC. It is the most…

Q: Suppose that autonomous consumption is 1,500, government purchases are 500, planned investment…

A: We can find the equilibrium GDP by the following formula: Y = C + I + G + NX where,  Y is…

Q: Question 24 In the definition of marginal propensity to consume, marginal refers to the amount of…

A: Consumption function is a sum of autonomous and induced consumption. Autonomous consumption is…

Q: The Martin family has a disposable income of $90,000 annually. Currently, the Martin family spends…

A: Annual consumer spending is the total money spend annually on consumption of final goods and…

Q: When real GDP increases from $20,000 to $20,198, consumption increases from $18,000 to $18,050. What…

A: Marginal Propensity to Consume is nothing but the ratio of change in consumption with the change in…

Q: Suppose a closed economy with no government spending or taxing is capable of producing an output of…

A: An economy reaches equilibrium at that output level where its aggregate demand becomes equal to…

Q: Assume that government purchases decrease by $10 billion, with other factors held constant,…

A: The autonomous spending multiplier shows the change in national spending as a result of a change in…

Q: Assume that the short run equilibrium GDP is $4,000 billion and the potential GDP is $5,000 billion.…

A: a) The society is more inclined towards the consumption because the MPC is more than MPS which is…

Q: Suppose economists observe that an increase in government spending of $14 billion raises the total…

A: The crowding out effect is implied to as a condotion where an increment in government spending…