Assume the following information for an economy what is equilibrium level of economy.      Natural level of output = $190b     Autonomous consumption = 50     Total investment = 16     Government expenditure = 19     Autonomous taxation = 20     Marginal propensity to consume = 0.6

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

A: We know, from the fundamental macroeconomic identity,  Y = C(Y - T) + I + G Where Y represents the…

Q: In 2009, the US Federal government cut taxes by approximately $300 billion, increased government…

A: MPC: It measures the proportion of extra income that is spent on consumption.

Q: Assume an economy in which: (i) there are no exports and no imports, (ii) investors always want to…

A: National income is a tool to ascertain the level of economic activity in the nation. A higher…

Q: Suppose that the marginal propensity to consume is   dC dy = 0.8 − e−0.2y      (in billions of…

A: Answer - Given in the question - dC/dY =  0.8 − e−0.2y C0 = $7.5 billion when disposible income is…

Q: Suppose you have an open economy with Government sector imposing tax to finance its expenditures.…

A: The open economy is the economy which allows for international trading and exchange goods and…

Q: Solve the attachment. image

A: GDP { Gross Domestic product } is the value at market prices of all final services and goods…

Q: Consider an economy described by the following equations:   C = 300 + 0.90 (Y – T)…

A: Government spending multiplier = 1 / 1 - MPC Government spending multiplier = - MPC / 1 - MPC

Q: Suppose the MPC = 0.6? What will be the government spending multiplier? If, in this economy,…

A: An increase in the government expenditure means increase in the national income of the country. The…

Q: Assume that GDP (Y) is 6,000. Consumption (C) is given by the equation C= 600+ 0.6(Y – T).…

A: National savings come from two sources the public sector and the private sector. The private sector…

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: Which of the following statements is true?

A: Government spending refers to the amount of expenditure carried out by the government on the…

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: You are given the following information about a closed economy with no government: Consumption =…

A: Autonomous spending means that it is not dependent on the level of income(Y). Therefore, we put it…

Q: Assume the following economy: Autonomous Consumption = £10,000; Marginal Propensity to Consume =…

A: Given: The autonomous consumption =  £10,000 MPC = 0.8 Investment = £30,000 Government spending…

Q: f the current real GDP is P700 billion, which of the following policies would bring the economy to…

A: MPC = 0.8 => Government spending multiplier = 1 / (1-MPC) => Government spending multiplier =…

Q: Given the following consumption fiction, C= 100 + 0.6YD calculate by how much induced consumption…

A: We are going to find the change in consumption spending to answer this question.

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: An economy with no government is described by the following: • Marginal propensity to consumer = 0.8…

A: Disclaimer :- as you posted multipart questions, as per guidelines we are solving only the first 3…

Q: Consider an economy in which autonomous consumption, planned autonomous investment, autonomous…

A: Given, Autonomous consumer spending =$3,000  Investment = Ip = $5,000 Government spending = G =…

Q: An economy with no government is described by the following: • Marginal propensity to consumer = 0.8…

A: An inflationary output gap refers to the macroeconomic concept which measures the difference between…

Q: True or false? Explain why.      "The marginal propensity to consume out of transitory income is…

A: Marginal propensity to consume or MPC is the ratio of change in consumption due to change in income.…

Q: The marginal propensity to save is 0.2 and the proportional rate of tax is 0.4. The multiplier of…

A: The sum of marginal propensity to consume and marginal propensity to save is 1.

Q: What happens to aggregate output if both taxes and government spending are lowered by $300 billion…

A: A multiplier is a proportionality factor that measures how much endogenous variable changes in…

Q: Suppose that autonomous consumption (a) is 200, private investment spending (I) is 340, government…

A: Given,  Autonomous consumption (a) = 200 Investment spending (I) = 340 Government spending (G) = 300…

Q: In the economy of Keynesian Island, autonomous consumption expenditure is $50 million, and the…

A: Gross domestic product (GDP) refers to the value of all final good and services that produced within…

Q: Consider two closed economies that are identical except for their marginal propensity to consume…

A: Given information: There are two economies - First economy has MPC = 0.5 and  Second economy has MPC…

Q: Consider two closed economies that are identical except for their marginal propensity to consume…

A: An investment increases by $20billion, new AE line will shift upward parallely by $20billion.

Q: Suppose the government reduces taxes by 50,000,000, that there is no crowding out, and that marginal…

A: Initially, due to the tax cut of 50,000,000 the spendings of people rose by the MPC (given as 0.9).…

Q: In a simple model without government spending or taxation, if C = a +bY where C is consumer spending…

A: The consumption function depicts the functional relationship between consumption and level of…

Q: An increase in the marginal propensity to consume will make the spending multiplier ? An increase in…

A: Marginal propensity consume shows the ratio of  change in consumption to change in income  MPC=…

Q: In a closed economy, GDP is $1000, government purchases are $200, and consumption is $700. If the…

A: In Keynesian macroeconomics when the price level in the economy is assumed to be fixed then planned…

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: 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: Consider the case of a closed economy for which the following initial data are known: c=0.70, t=0.3;…

A: Introduction We have given data of a closed economy.  c = 0.70 ,  t = 0.3 , government expenditure…

Q: net taxes were lowered from $5000 to $1000, the MPC is .75, and autonomous consumption spending is…

A: Disposable income refers to the remaining amount after paying all the necessary taxes.

Q: Consider a closed economy with a government.  Consumption is given by C = 1,000 + 0.8Yd   Further, t…

A: Aggregate output is the sum of consumption, investment, government spending and net exports in an…

Q: Q1:You are given the following income-expenditures model for an economy :          Consumption C =…

A: 3. We have given an investment level of 120. So at equilibrium, we know that investment always…

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: What is the eventual effect on real GDP if the government increases its purchases of goods and…

A: Government purchases of goods and services increased by = $75000 MPC = 0.75

Q: True or false? Why? "The marginal propensity to consume out of transitory income is greater than the…

A: Marginal propensity to consume (MPC):   The marginal propensity to consume (MPC) measures the amount…

Q: If the marginal propensity to consume (MPC) is 0.80, and if policy makers wish to increase real GDP…

A: Change in GDP =  - MPC / (1 - MPC)* change in taxes 200=  -0.80/(1-0.80) change in taxes* Change in…

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: An economy with no government is described by the following: • Marginal propensity to consumer = 0.8…

A: Balanced Budget function  is the function of government expenditures and revenues which depicts that…

Q: Consider a closed economy. Let Y denote GDP, C denotes Consumption, I denotes Investment, r is the…

A: Given that: Y = 8,000 C = 600 + 0.8(Y – T) I = 2,000 – 100r T = 500 G = 500 Where Y denotes…