a O ECO 201 Summer 2. Saved Dylan Martin D Insert Draw Design Layout References

Question

a O ECO 201 Summer 2. Saved Dylan Martin D Insert Draw Design Layout References Mailings Review View HelpTell me Martin File e Times AaBbCcDd AaBbCcDd AaBb( Cipboard n Font Paragraph Gross Domestic Product $100 200 300 400 500 600 Consumption $100 160 280 340 440 Expected Rate of Return Amount of Investment 15% 12 $0 40 80 120 160 Please answer the next 4 questions based on the data in the ta ble above. Also,-12%, G-120, and net exports o 11. The multiplier is equal to 12. Equilibrium GDP_ 13. If r increases to 15%, ceteris paribus then equilibrium GDP is now equal to 14. The MPC is equal to Page 3 of 10 4 of 2342words ?? Dsplay Settings 1 + 100s

Explanation / Answer

Multiplier= 1/1-mpc

mpc= change in consumption / change in gdp

= (160-100)/(200-100)= 0.6

Multiplier= 1/(1-0.6)= 2.5

12) at equilibrium gdp, gdp= consumption + G + I

When r= 12% I= 40

G= 120

I+G= 40+120= 160

When gdp is 500, equilibrium condition is satisfied.

Equilibrium gdp is 500.

13) when r is 15% I= 0

G+I= 120+0= 120

Equilibrium gdp is 400 as C+G+I= 280+120

Equilibrium gdp= 400

14) MPC= 0.6, calculated in (11)

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