QUESTION 1 a. What will the multiplier be given the MPS values below? Fill in th
ID: 1094710 • Letter: Q
Question
QUESTION 1
a. What will the multiplier be given the MPS values below? Fill in the table with your answers.
Instructions: Round your answers to 3 decimal places.
b. What will the multiplier be given the MPC values below? Fill in the table with your answers.
Instructions: Round your answers to 3 decimal places.
c. How much of a change in GDP will result if firms increase their level of investment by $8 billion and the MPC is 0.80?
Instructions: Enter your answers as whole numbers.
$ ______billion. ?
How much of a change in GDP will result if firms increase their level of investment by $8 billion and the MPC instead is 0.67?
$ ________billion. ?
QUESTION 2
a. By how much will GDP change if firms increase their investment by $8 billion and the MPC is 0.80 (4/5)?
Instructions: Round your answers to the nearest whole number.
The change in GDP = $______ billion. ?
b. If the MPC is 0.67 (2/3)?
The change in GDP = $______ billion. ?
QUESTION 3
Suppose that a certain country has an MPC of 0.9 and a real GDP of $400 billion. If its investment spending decreases by $4 billion, what will be its new level of real GDP?
Instructions: Enter your answer as a whole number.
Real GDP = $ _______billion. ?
Explanation / Answer
1.
2.
3. dY/dI = 1/(1-MPC), MPC= .8
dY= 8*1/.2 = $40 billion
dY/dI = 1/(1-MPC) , MPC=2/3
dY= 8*1/(1/3) = $24 billion
Question 2:
dY/dI = 1/(1-MPC), MPC= .8
dY= 8*1/.2 = $40 billion
dY/dI = 1/(1-MPC) , MPC=2/3
dY= 8*1/(1/3) = $24 billion
Question 3
MPC=.9 y=$900 billion dI=-4
dY=dI*1/(1-MPC) = -4 * 10 = - 40 billion dollar
New GDP= Y+dY=900-40 =860 billion dollar
MPS Multiplier (1/MPS) 0 Undefined 0.4 2.5 0.5 2 1 12.
MPC Multiplier 1/(1-MPC) 1 Undefined 0.9 10 0.75 4 0.5 2 0 1Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.