Question

The government raises taxes by $100 billion. If the marginal propensity to consume is 0.6, what...

The government raises taxes by $100 billion. If the marginal propensity to consume is 0.6, what happens to the following? Do they rise or fall? By what amounts?

a. Public saving

b. Private saving

c. National saving

d. Investment

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1; the government increases its spending by $1000 billion. if the marginal propensity to save is...
1; the government increases its spending by $1000 billion. if the marginal propensity to save is 0.2, what happens to the following: do they rise or fall and  by what amount a public saving b private saving c national saving d investment e interest rate  
Assume the marginal propensity to consume is 0.8 and potential output is $800 billion. If actual...
Assume the marginal propensity to consume is 0.8 and potential output is $800 billion. If actual real GDP is $700 billion, which of the following policies would bring the economy to potential output? a. Decrease taxes by $25 billion. b. Decrease government transfers by $25 billion. c. Decrease taxes by $100 billion. d. Increase taxes by $100 billion.
Consider a closed economy, where the marginal propensity to consume is 0:9. What would be the...
Consider a closed economy, where the marginal propensity to consume is 0:9. What would be the e§ect on private, public and national saving of a $10 million decrease in both taxes and government spending? Would the equilibrium real interest rate increase, decrease, or stay the same?
1. Explain the effects of the following actions on equilibrium income (Assume that the marginal propensity...
1. Explain the effects of the following actions on equilibrium income (Assume that the marginal propensity to consume is 0.8).                            a. Government purchases rise by $20 billion.                            b. Taxes fall by $20 billion.
a) Suppose the marginal propensity to consume is 0.7, what will happen to real GDP if...
a) Suppose the marginal propensity to consume is 0.7, what will happen to real GDP if planned investment increases by $300 billion?b) Suppose the marginal propensity to save is .4, what how much will taxes have to change if real GDP decreases by $450 billion?
4. [Marginal Propensity to Consume] Find the marginal propensity to consume (MPC = dC/dY) for each...
4. [Marginal Propensity to Consume] Find the marginal propensity to consume (MPC = dC/dY) for each of the following consumption functions. (a) C = C0 +bY, C0 = 1500, b = 0.6. (b) C = 1200+0.75Yd, Yd = Y ?T, and T = 100. (c) C = 2000+0.8Yd, Yd = Y ?T, and T = 300+0.1Y.
3. Use the circular flow of income to answer the following question. Assume a consumption function...
3. Use the circular flow of income to answer the following question. Assume a consumption function of the form, C=a+b(Y-T). If the marginal propensity to consume is 9 and the government increases taxes by $200, a. Explain (precisely) what happens to the following variables. a) Public Saving b)Private Saving c) National Saving
Suppose the marginal propensity to consume is 0.5. If the government believes aggregate demand is $500...
Suppose the marginal propensity to consume is 0.5. If the government believes aggregate demand is $500 billion below potential and any increase in government spending will experience $100 billion in crowding out, how much does the government need to increase spending to have aggregate demand reach potential?
The marginal propensity to consume is 0.5 as above. The federal government wants to increase GDP...
The marginal propensity to consume is 0.5 as above. The federal government wants to increase GDP by $100 billion. By how much should government spending be increased? Suppose instead that the government wants to achieve the same goal of increasing GDP by $100 million. Assuming lump-sum taxation, what is the required tax cut in order to reach the target GDP?
Here are some facts about the economy of Inferior. Marginal propensity to consume 3/5 marginal propensity...
Here are some facts about the economy of Inferior. Marginal propensity to consume 3/5 marginal propensity to import 0 autonomous consumption 4 exports 0 private investment 20 income tax rate 0 government expenditures 0 Income consumption investment government aggregate expenditures expenditures 0 10 20 30 40 50 60 70 80 90 Suppose that investment rises to 28. What is the new GDP?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT