Economics (Irwin Economics)
21st Edition
ISBN: 9781259723223
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 31.2, Problem 4QQ
To determine
Real GDP .
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A country has an initial real output of $162 Billion. What would the final output be expected to be if:a. The government spends $15 billion on infrastructure and the MPC of the country is 0.35b. The government reduces taxes by $3.5 billion and the MPW of the country is 0.75c. The government makes no changes to taxes or spending.d. The government decreases spending nationwide by $9 billion in a country where people are likely to withdraw 60 cents on every new dollar of income.
An economy with no government and no foreign trade tends to move toward equilibrium GDPbecause at output levels greater than equilibrium GDP, inventories are
a)increasing, and actual investment exceeds desired investment.b)increasing, and actual investment is less than desired investment.c) decreasing, and actual investment exceeds desired investment.d)decreasing, and actual investment is less than the desired investment.
a. The key idea of the aggregate expenditure model is that in any particular year, the level of GDP is determined mainly
by
A) investment spending.
B) export spending.
C) government spending.
D) the level of aggregate expenditure.
b. U.S. net export rises when
A) the price level in the United States rises relative to the price level in other countries.
B) the growth rate of U.S. GDP is slower than the growth rate of GDP in other countries.
C) the value of the U.S. dollar increases relative to other currencies.
D) the inflation rate is higher in the United States relative to other countries.
Chapter 31 Solutions
Economics (Irwin Economics)
Ch. 31.2 - Prob. 1QQCh. 31.2 - Prob. 2QQCh. 31.2 - Prob. 3QQCh. 31.2 - Prob. 4QQCh. 31.7 - Prob. 1QQCh. 31.7 - Prob. 2QQCh. 31.7 - Prob. 3QQCh. 31.7 - Prob. 4QQCh. 31 - Prob. 1DQCh. 31 - Prob. 2DQ
Ch. 31 - Prob. 3DQCh. 31 - Prob. 4DQCh. 31 - Prob. 5DQCh. 31 - Prob. 6DQCh. 31 - Prob. 7DQCh. 31 - Prob. 8DQCh. 31 - Prob. 1RQCh. 31 - Prob. 2RQCh. 31 - Prob. 3RQCh. 31 - Prob. 4RQCh. 31 - Prob. 5RQCh. 31 - Prob. 6RQCh. 31 - Prob. 7RQCh. 31 - Prob. 8RQCh. 31 - Prob. 9RQCh. 31 - Prob. 1PCh. 31 - Prob. 2PCh. 31 - Prob. 3PCh. 31 - Prob. 4PCh. 31 - Prob. 5PCh. 31 - Prob. 6PCh. 31 - Prob. 7PCh. 31 - Prob. 8PCh. 31 - Prob. 9PCh. 31 - Prob. 10P
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- When planned investment exceeds saving in a private closed economy, Multiple Choice: ● ● ● aggregate expenditures will exceed GDP. aggregate expenditures will be less than GDP. aggregate expenditures will equal GDP. consumption plus investment will equal GDP.arrow_forwardWhen the economy is operating at the equilibrium level of? GDP, we know that A. total planned real consumption expenditures equal real GDP. B. total planned real expenditures equal real GDP. C. planned real investment spending equals real net exports of zero. D. real net exports equal inventory changes.arrow_forwardIn an economy with no government and no trade, autonomous consumption is £200 and planned investment spending equals £100. The marginal propensity to consume is 0.7. Assume the aggregate price level and the interest rate are fixed. Based on the income-expenditure model, the equilibrium level of real GDP for this country is: Select one: a. £428.6. b. £300. c. £1,200. d. £1,000.arrow_forward
- The sum of the marginal propensity to save and the marginal propensity to consume Select one: A. always equals 0. B. is greater than zero but less than 1. C. sometimes equals 1. D. always equals 1. E. never equals 1.arrow_forwardAssume the marginal propensity to save is 0.10. Firms become optimistic and increase investment spending by $10 billion. Other things being equal, real GDP will: Select one: a. increase by $10 billion. b. not change. c. increase by $1 billion. d. increase by $100 billion.arrow_forwardAssume that the Equilibrium GDP is $4,000 billion. The Potential GDP is $5,000 billion. The marginal propensity to consume is 4/5 (0.8). By how much and in what direction should government purchases be changed? a. increase by $1,000 billion. c. increase by $100 billion. b. decrease by $1,000 billion. d. increase by $200 billion.arrow_forward
- In a closed economy with no government, aggregate expenditure is saving plus investment. consumption plus investment. consumption plus the MPC. O MPC + MPS.arrow_forwardMacroeconomics: An economy is experiencing a high rate of inflation. The government wants to reduce consumption by $36 billion to reduce inflationary pressure. The MPC is 0.75. By how much should the government raise taxes to achieve its objective? A. $6 billionB. $12 billionC. $16 billionD. $9 billionarrow_forward1. Country X has following data: C = 20 + 0.8Y4, I = 30, G = 40, Tx = 20, T, = 15, X = 60, M = 20 + 0.04Y, incoming year growth target is 600, All figures is billion. Please calculate: a. National income equilibrium! b. Consumption and saving equilibrium! c. Government income from tax! d. How much change in government consumption if they want to achieve growth target?arrow_forward
- Question 3 Not yet answered Flag question. If the MPC is 0.95, then a $10 million increase in disposable income will a. Increase consumption by $105 million b. Increase consumption by $9.5 million C. Decrease consumption by $950 million d. Increase consumption by $200 million Give your reasons Į A▾ B I Ff ▾ !!! 回arrow_forwardCould you do C and D A country has an initial real output of $162 Billion. What would the final output be expected to be if:a. The government spends $15 billion on infrastructure and the MPC of the country is 0.35b. The government reduces taxes by $3.5 billion and the MPW of the country is 0.75c. The government makes no changes to taxes or spending.d. The government decreases spending nationwide by $9 billion in a country where people are likely to withdraw 60 cents on every new dollar of income.arrow_forwardIn an economy with lump-sum taxes and no international trade, if the marginal propensity to consume is 0.8, which of the following is true? A. When consumption increases by RM5, investment increases by a maximum of RM1. B. When consumption increases by RM5, savings increase by a maximum of RM1. C. When investment increases by RM1, income increases by a maximum of RM5. D. When investment increases by RM1, consumption increases by a maximum of RM5.arrow_forward
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