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Homework Help is Here – Start Your Trial Now!BusinessEconomicsWhat is the value of the marginal propensity to consume (MPC) in this model? (2) What is the value of the multiplier in this economy? (3) Calculate aggregate spending in this economy (2) Calculate the equilibrium level of output. (3) Suppose the level of output that creates full employment (Yf) in the economy is 1 800. Determine the level of investment spending that would create full employment in this economy. (4)What is the value of the marginal propensity to consume (MPC) in this model? (2) What is the value of the multiplier in this economy? (3) Calculate aggregate spending in this economy (2) Calculate the equilibrium level of output. (3) Suppose the level of output that creates full employment (Yf) in the economy is 1 800. Determine the level of investment spending that would create full employment in this economy. (4)BUYENGR.ECONOMIC ANALYSIS14th EditionISBN:9780190931919Author:NEWNANPublisher:NEWNAN1 Making Economics Decisions2 Estimating Engineering Costs And Benefits3 Interest And Equivalence4 Equivalence For Repeated Cash Flows5 Present Worth Analysis6 Annual Cash Flow Analysis7 Rate Or Return Analysis7A Difficulties In Solving For An Interest Rate8 Chossing The Best Alternative9 Other Analysis Techniques9A Investing For Retirement And Other Future Needs10 Uncertainty In Future Events10A Diversification Reduces Risk11 Depreciation12 Income Taxes For Corporations12A Taxes And Personal Financial Decision Making13 Economic Life And Replacement Analysis14 Inflation And Price Change15 Selection Of A Minimum Attractive Rate Of Return16 Economic Analysis In The Public Sector17 Accounting And Engineering EconomyA Introduction To SpreadsheetsB Time Value Of Money Calculations Using Spreadsheets And CalculatorsC Compound Interest TableD Fundamentals Of Engineering (fe) Exam Practice ProblemsChapter1: Making Economics DecisionsChapter QuestionsSection: Chapter QuestionsProblem 1QTC Problem 2QTC Problem 1P Problem 2P Problem 3P Problem 4P Problem 5P Problem 6P Problem 7P Problem 8P Problem 9P Problem 10P Problem 11P Problem 12P Problem 13P Problem 14P Problem 15P Problem 16P Problem 17P Problem 18P Problem 19P Problem 20P Problem 21P Problem 22P Problem 23P Problem 24P Problem 25P Problem 26P Problem 27P Problem 28P Problem 29P Problem 30P Problem 31P Problem 32P Problem 33P Problem 34P Problem 35P Problem 36P Problem 37P Problem 38P Problem 39P Problem 40P Problem 41P Problem 42P Problem 43P Problem 44P Problem 45P Problem 46P Problem 47P Problem 48P Problem 49P Problem 50P Problem 51P Problem 52P Problem 53P Problem 54P Problem 55P Problem 56P Problem 57P Problem 58P Problem 59P Problem 60P Problem 61P Problem 62P Problem 63P Problem 64P Problem 65P Problem 66P Problem 67P Problem 68P Problem 69P Problem 70P Problem 1QTC See similar textbooksRelated questions

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Question

 

Question 1

(14 marks)

Consider the following numerical example of the simple Keynesian model with no government spending, taxes or a foreign sector (all figures in R millions):

            C   =   100 + 0,9Y

            I    =   50

 

Answer the following questions.

• What is the value of the marginal propensity to consume (MPC) in this model? (2)
• What is the value of the multiplier in this economy? (3)
• Calculate aggregate spending in this economy (2)
• Calculate the equilibrium level of output. (3)
• Suppose the level of output that creates full employment (Yf) in the economy is 1 800. Determine the level of investment spending that would create full employment in this economy. (4)

 

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• The chart below gives the data necessary to make a Keynesian cross diagram. Assume that the tax rate is 0.4 of national income, the MPC out of after-tax income is 0.9, investment is 58, government spending is 60, exports are 40, and imports are 0.1 of after-tax income.   Alt Text: This chart contains the following columns: National Income, After-tax income, Consumption, I+G+X, Minus Imports, and Aggregate Expenditures. The National Income Column contains the following values for each of the following rows: 100, 200, 300, 400, 500, and 600. The only other value provided is the consumption, 104, for national income, 100. What does consumption equal when income equals 600? Group of answer choices a. 324 b. 374 c. 540 d. 1042In the Keynesian cross model, assume that the consumption function is given by C = 20 + 0.8(Y- T). Planned investment is 200; government purchases and taxes are both 400. There is no foreign trade. An economist has claimed that the full employment level of output is 2,400. How much should the government expenditure or taxes rise or fall to achieve full employment?
• Discuss the multiplier effect including a description of what it describes in macroeconomic terms, how it is determined and an illustration of how it is defined.Assume the following information for an economy:     Natural level of output = $190b     Autonomous consumption = 50     Total investment = 16     Government expenditure = 19     Autonomous taxation = 20     Marginal propensity to consume = 0.6 Based on this information answer the following questions: b)  Calculate the output ratio for the economy.Assume a simple Keynesian macro model:AE = C + I      C = 100 + 0.75Y      I = 200i) Find the equilibrium level of income. Show the equilibrium on a graph. ii) Calculate the simple multiplier and find the effect on the equilibrium level of income of a change in the level of planned investment from 200 to 150 by using a multiplier.
• Macroeconomics: Assuming marginal propensity to consume is 0.5. If there is a shock to the economy that increases investment spending by 200 billion dollars what will the total Change to GDP be? (Ignore taxes and imports)Keynesian cross" exercises Let the economy in our numerical example be: C = 70 + 0.75Y I = 60 Y* = 520 Exercise 1: Add government spending G = 100, not financed by taxes by taxes Show that the new equilibrium income is: Y = 920 What is the government spending multiplier? Exercise 2 : Redo your work assuming that: 1. government spending (G: 100) is financed (in part) by a per capita tax 1. public spending (G: 100) is financed (partly) by a per capita tax (capitation) whose total amount is T=80 and, 2. the marginal propensity to consume is applied to disposable income Calculate the new equilibrium income (Y2) and the disposable income (Y ;) What is the multiplier for the government's balance? Exercise 3: If government spending is financed by a 10% income tax and the propensity to consume is applied to disposable income, calculate the equilibrium income (Y2*) (Y2*) and disposable income (Y;) In this case, what is the government's balance of payments multiplier?Consider the Keynesian Liquidity Constrained consumer (LCC). • (viii) What is the marginal propensity to consume out of temporary income? What does it depend on? (ix) What is the marginal propensity to consume out of permanent income? Does it depend on the same factors you mentioned in the previous question?
• Question 12In the Keynesian model, the consumption function is C = 0.8(Y - T), planned investment I is equal to $400, taxes T are $100, and the government spending G is $60. Suppose the current level of output is. Y = $1,850. Are firms in this economy experiencing an unexpected change in inventory? If yes, by how much? %3DWe know the following about a closed economy: (Y-T), • Consumption: C = 20 + 0.7 • Investment: I = 4c Government expenditures: G= 30 • Taxes: T = 0.2Y   When the government increases its expenditures without changing the way it collects taxes, there is a multiplier effect. What is the value of the multiplier? Select one (two digits after the decimal): a. 2.33 b. 2.50 c. 3.33 d. 4.00

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