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Help? if possible not cursive. please What will the multiplier be when the MPC is: place...

Question:

help? if possible not cursive. please
What will the multiplier be when the MPC is: place answer next to MPC MPC-.9 (do not need to show work) 4. a. s. a. Whst chan
What will the multiplier be when the MPC is: place answer next to MPC MPC-.9 (do not need to show work) 4. a. s. a. Whst change in Nominal GDP (constant price level) will resultif firms increase their level of investment () by $8 billion and the MPC is.757 Change in Nominal GDP- Show answer and work here: b. If the MPC is.80? Change in GDP Show answer and work here: 6. Indicate what the changes listed would do to the Aggregate Demand Curve by using an (I) for increase AD (shift) (D) for decrease AD (shift) or N for neither a. The price level increases b. Investment decreases c. Imports decrease and exports increase 一一. Consumption increases e. Government purchases decrease

Answers

Answer 4

Multiplier = 1 ÷ (1 – MPC)

= 1 / (1 - 0.9)    = 10

Answer 5

A) For this part of the problem, we're given that the change or increase in investment is $8 billion and that the marginal propensity to consume (MPC) is 0.75 (3/4).

When performing calculations that involve the gross domestic product, we can use the GDP equation:

Y = C + I + G + NX

Here, *Y is the GDP that is dependent upon:

  • Consumption (C)
  • Investment (I)
  • Government spending (G)
  • Net exports (NX)

This equation plays an important role in solving the given problem because we have to calculate the GDP.

The multiplier is given by 1 / (1 - MPC).

So:

Change in Y = 1 / (1 - MPC) * change in investment (I)

Change in Y = 1 / {1 - (3/4)} * 8

Change in Y = 4 * 8

Change in Y = 32 billion

Thus, this $32 billion will be equal to income.

B) Now, if the MPC is 0.80 (4/5), the change in the GDP is given by:

We have to calculate the change in GDP when the marginal propensity to consume (MPC) is 4/5.

We have that the change in the investment is $8 billion.

Change in Y = 1 / (1 - MPC) * change in investment (I)

Change in Y = 1 / {1 - (4/5)} * 8

Change in Y = 5 * 8

Change in Y = $40 billion

Thus, the change in GDP = $40 billion.

Answer 6

a. I - Increase in price level causes Aggregate demand to increase

b. D - As the interest rates rises investment falls so there would be leftward shift of AD

d. I - Increase in consumption causes to shift AD to the right

.

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