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- Consumption expenditures in the U.S. usually account for approximately 40 O 50 O 60 O 70 80 percent of GDP.What is the initial change in consumption if an economy's MPC is 0.75 and there is a decrease in taxes of $1 billion? O $1.75 billion O $1 billion O $1.33 billion O $0.75 billionWhen there's an increase in the cost of electricity for operating firms machines: O a. The investment demand curve will shift to the right O b. The consumption schedule will shift downward O c. The saving schedule will shift downward O d. The investment demand curve will shift to the left
- Suppose that the level of GDP increased by $100 billion in an economy where the marginal propensity to consume is 0.5. The initial change in spending must have been: O $5 billion O $100 billion O $50 billion O $500 billionProblem 1 The various expenditure categories within the economy are: C = 600+ 0.8Yd | = 800 G = 600 NX = 0 T= 700 Refer to problem 1. Equilibrium Real GDP is O 7200 O 4200 O 1800 O 5500Problem 1 Given the following data for a closed economy I= 3400 Planned Investment G=4000 Government Spending C= 3,800 + 0.8 Yd Consumption function T= 1000 Taxes
- If disposable income rises from $15,000 to $20,000 and the marginal propensity to consume equals 0.85, then saving must increase by: O $500 O $750 $1,000 O $2,000 O $4,250The difference between planned and unplanned spending is Select one: O a. always negative O b. unplanned changes in inventories O c inventories O d. always positiveAssume in a simple economy that thc level of saving is -500 when aggregate ourput equals zero and that the margina! propensity to save is 0.2. Derive the saving function and the consumption function, and draw a graph showing these func- tions. At what level of aggregate ouiput does the consumption curve cruss the 45° line? Explain your answer and show this un the graph.
- 25 1 Calculate the equilibrium level of investment if you have the following equations: C=0.4Yd+20, national income is 1000, government expenditures is 200, tax is 50 Investment =300 O Investment-D350 O Investment3D400 O Investment3D450 O None of the above OIf Carol's disposable income increases from $1,200 to $1,700 and her level of saving increases from minus $100 to a plus $100, her marginal propensity to O save is 3/5. O consume is 1/2. O consume is 3/5. O consume is 2/5.Suppose disposable income increases from $7 trillion to $8 trillion. At the same time, consumption expenditure increases from $6.8 trillion to MPC must equal Thus the O $7.8 trillion; 0.60 O $7.6 trillion; 0.80 O $7.4 trillion; 0.40 O $8 trillion; 1.00
