The economy is at the Keynesian equilibrium. Assuming that taxes are zero, a decrease in the marginal propensity to consume decreases unplanned inventories in the short run.
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true or false and why
The economy is at the Keynesian equilibrium. Assuming that taxes are zero, a decrease in the marginal propensity to consume decreases unplanned inventories in the short run.
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- According to the Keynesian-cross analysis, if the marginal propensity to consume is 0.75 and government expenditures increased by 100 while taxes are cut by 100, equilibrium income will rise by: Group of answer choices 0. 100. 200. 700.Given: C = 100 + 0.75Yd; I = 120 - 0.1Y – 200i; G= 40; T = 40 What is the marginal propensity to consume?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 increasing
- In an economy, marginal propensity to consume (MPC) is 0.75 where Keynesian model works. Now, if government increases both its expenditure and taxes by 1000, then Income increases by 4000; Income increases by 3000; Income increases by 1000; Income do not change?If the multiplier is 10, the marginal propensity to consume must be 0.1. True FalseAs shown in Exhibit 2, the marginal propensity to consume (MPC) is: Group of answer choices 0.33. 0.50. 0.67. 0.75.
- If the marginal propensity to consume (MPC) is 0.90, a $100 increase in taxes imposed by the government, other things being equal, will cause a decrease in GDP by 100 900 $1,000Which 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…If the economy has an MPC equal to 0.80 and is currently $800 million below its full employment income, will a $150 million increase in investment spending bring the economy to its macroeconomic equilibrium, all else equal?