9. In the simple Keynesian cross model of a closed economy without taxes, if the initial equilibrium level of income (Y) is $300 billion, and the marginal propensity to Consume (MPC) is 0.75. What would be the new equilibrium level of income (Y) if government expenditures (G) increase by 20 billion? $320 billion b. $380 billion c. $220 billion d. $520 billion e. $326 billion

9. In the simple Keynesian cross model of a closed economy without taxes, if the initial equilibrium level of income (Y) is $300 billion, and the marginal propensity to Consume (MPC) is 0.75. What would be the new equilibrium level of income (Y) if government expenditures (G) increase by 20 billion? $320 billion b. $380 billion c. $220 billion d. $520 billion e. $326 billion

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 5SQP

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7. Suppose in the Simple Keynesian model that the marginal propensity to consume is b = 0.75. If both taxes, T, and government spending, G, are increased by $400, then equilibrium Y O decreases by $1,200. increases by $1.600. increases by $400. neither increases nor decreases. none of the other options.
11. In the Keynesian cross model, assume that the consumption function is given by: C = 140 +.75(Y-T); Planned investment is 300; government purchases are 400 and taxes are 500. (optional) a. Find the equation of planned expenditure as a function of income. Graph planned expenditure as a function of income. Make sure to label all curves and axes. b. What is the equilibrium level of income? Show your work. c. If government purchases increase to 450, what is the new equilibrium income? What is the multiplier for government purchases? Show your work. d. What level of government purchases is needed to achieve an income of 3,400? (Taxes remain at 500.) Show your work. e. What level of taxes is needed to achieve an income of 3,400? (Government purchases remain at 400.) Show your work.
1. According to the Keynesian cross model, if the murginal propensity to consume is 2/3, an increase in government purchases of $120 billion increases equilibrium income by $360 billion. $240 billion $160 billion. $180 billion.
Given the following information, answer the question. Autonomous consumption = R100 million Investment spending = R300 million Government spending = R200 million Taxes = R60 million Marginal propensity to consume = ¾ The equilibrium level of output and income is equal to ______. Select one: A. R2 160 million B. R2 580 million C. R2 640 million D. R2 220 million
1. If a simple model of the macro economy is made in which the Marginal Propensity to spend is 0.65, a) What is the multiplier? b) By how much would the equilibrium national income change if autonomous consumption falls by 125?
15. If the MPC is 3/4, what is the government spending multiplier in the simple Keynesian model?
1.Draw the graph of the Keynesian cross model as a comparison of planned and realized expenditures. What is the intercept of the planned expenditure line? What is its slope? If government expenditures would be a positive function of output, how would the Keynesian cross change?
16. Consider a closed economy with demand for goods as follows: yd = C +I+ G C = 200 + 0.80(Y – T) I = 600 G = 1000 T = 1000 a. What is "autonomous expenditure" for this economy? b. Graph this economy's (planned) aggregate expenditure function. Be sure to give the coordinates of at least 2 distinct points in your graph. c. According to the Keynesian Cross model of income determination, what would be the short run equilibrium value of real aggregate income (Y) for this economy? d. If government purchases (G) were to increase to 1,200, what would the new short run equilibrium value of income be? etv MacBook Air 80 888 DII F3 F4 F5 F6 F7 F8 F9 F10 F11 F12 # $ % & ) + 3 4 6 7 8 9 %3D de E Y U P { } [ D F G H J K L + I| ....
Insert the missing word or phrase: 1. If the aggregate consumption function shifts up, the level of income-expenditure equilibrium GDP will increase by an amount___________ than the increase of the consumption function. 2. _____ _________ _________ - the increased costs associated with making transactions that arise from the public’s efforts to avoid the inflation tax. 3. Persistent budget deficits have long-run consequences because they lead to an increase in ______________ ___________. 4. Countries can fix exchange rates using ________ ________ ____________, which requires them to hold foreign exchange reserves that they use to buy any surplus of their currency. 5. When planned aggregate spending does NOT equal current GDP, there is a selfadjustment process that operates through __________ _________________. 6. The money supply expands when banks _______ _________ from the excessreserves they hold. 7. The unemployment rate generally ________ when the growth rate of real GDP is above…
Question 8 Real GDP in the economy is $7,900 Billion and the Marginal Propensity to Consume is 0.56. What will Real GDP in the economy be, in $ Billions, after a $10 Billion increase in Government Spending? (Round your FINAL answer to the nearest whole number/integer.) (BE VERY CAREFUL NOT TO ROUND "MIDDLE" CALCULATIONS. ONLY ROUND THE FINAL ANSWER.) (Do not enter a dollar sign, $. or the word "Billion", just the number.)
1. Suppose that the economy can be described by the following equations: C = 400 + (8/9)*DI I = 300G = 800T = (1/2)*Y (X – M) = 0. a. If national income (Y) increased by $1, by how much would consumption increase? What is the name of this concept?b. Find the equilibrium level of output.c. The budget for this fiscal year increases government spending by $50. i) Sketch the effect of the increase in government spending.ii) Calculate the new equilibrium level of income.iii) Calculate the change in income and compare to the increase in government spending. Comment.iv) Given your numerical answer in part (iii), calculate the change in national income when government spending increases by one dollar.v) Derive the actual value of the fiscal multiplier using an algebraic equation. Compare to part (iv).Now G assumes its original value of G = 800.d. Congress decreases the tax rate from (1/2) to (1/4) i) Sketch the effect of the decrease in the tax rate. ii) Calculate the new equilibrium level of…
23) If the marginal propensity to consume (MPC) is 0.8 and if government spending (G) rises by $50 while investment (1) falls by $20, by how much will equilibrium income rise? (Jika kecenderungan mengguna sut (MPC) adalah 0.8 dan jika perbelanjaan kerajaan (G) meningkat sebanyak $50 manakala pelaburan (1) jatuh $20, berapakah kenaikan pendapatan keseimbangan meningkat?) $12 $30 O $120 $150