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The Keynesian spending multiplier effect means that a given change in autonomous expenditures

A. will change equilibrium income by an amount greater than the initial change in autonomous expenditures.

B. will change equilibrium by an amount less than the initial change in autonomous expenditures.

C. will change equilibrium income by an amount equal to the initial change in autonomous expenditures.

D. will change the MPC by a multiple of the initial change in autonomous expenditures.

E. will change the MPS by a multiple of the initial change in autonomous expenditures.

The Keynesian tax multiplier effect means that a given change in autonomous taxes

A. will change equilibrium income by an amount greater than the initial change in autonomous taxes.

B. will change equilibrium by an amount less than the initial change in autonomous taxes.

C. will change equilibrium income by an amount equal to the initial change in autonomous taxes.

D. will change the MPC by a multiple of the initial change in autonomous taxes.

E. will change the MPS by a multiple of the initial change in autonomous taxes.

Given a marginal propensity to consume equal to 0.75, the Keynesian spending multiplier is equal to

A. 1.00

B. 2.00

C. 1.03

D. 4.00

E. 5.00

Answer #1

Answer

option 1

will change equilibrium income by an amount greater than the
initial change in autonomous expenditures.

the Keynesian spending multiplier =1/(1-MPC)

so the given change in autonomous expenditure is multiplied by the
multiplier for total maximum change in the economy because of the
initial change in spending.

--------

Answer

option 1

will change equilibrium income by an amount greater than the
initial change in autonomous taxes.

This also has the greater change in the income by the time of tax
multiplier

tax multiplier=-MPC/(1-MPC)

--------

option D

Keynesian spending multiplier is equal
to=1/(1-MPC)=1/(1-0.75)=4

?

1.Which of the following is a true statement about the
multiplier? *
The multiplier effect does not occur when autonomous
expenditures decrease
The multiplier is a value between zero and one
The smaller the MPC, the larger the multiplier
The multiplier rises as the MPC rises
2.According to the Keynesian model of the macroeconomic, the
most effective means for closing a recessionary gap is *
Decrease in marginal tax rates which shift SRAS
Increases in government spending which shift AD...

A. Given the values below, is the
value of the spending (Keynesian) multiplier?
What is the value of the tax multiplier?
What is the value of the 'balanced budget multiplier'?
Solve for Y*.
a = 300
MPC = .6
I = 350
G = 400
T = 0
B. Given the values below, solve for
Y* (equilibrium output).
a = 300
MPC = .6
I = 350
G = 400
T = 250
C. Given the values below, solve for...

Consider an economy in which taxes, planned investment,
government spending on goods and services, and net exports are
autonomous, but consumption and planned investment change as the
interest rate changes. You are given the following information
concerning autonomous consumption, the marginal propensity to
consume, planned investment, government purchases of goods and
services, and net exports:
Ca = 1,500 – 10r; c = 0.6; Ta = 1,800; Ip = 2,400 – 50r; G =
2,000; NX = -200
(a)Derive Ep and...

The multiplier effect
Consider a hypothetical economy where there are no taxes and no
foreign trade, and households spend $0.90 of each additional dollar
they earn and save the remaining $0.10. The marginal propensity to
consume (MPC) for this economy is ; the marginal propensity to save
(MPS) for this economy is ; and the multiplier for this economy
is
Suppose investment spending in this economy decreases by $150
billion. The decrease in investment will lead to a decrease in...

28-
If autonomous spending rises,
the expenditure equilibrium will rise by the increase in
autonomous spending.
the expenditure equilibrium will increase by the level of GDP
times the expenditure multiplier.
the expenditure equilibrium will fall by the increase in
autonomous spending.
the expenditure equilibrium will rise by the increase in
autonomous spending multiplied by the expenditure multiplier.
31-
An example of fiscal policy is
an increase in autonomous spending by consumers.
an increase in social security spending by the elderly....

What is the multiplier?
The multiplier is the amount by which the change in ______
expenditure is magnified or multiplied to determine the change in
equilibrium expenditure and real GDP.
What does it determine?
For every dollar increase in ______ expenditure, the multiplier
determines the increase in real GDP.
A.
induced; induced
B.
induced; autonomous
C.
autonomous; induced
D.
autonomous; autonomous
Why does it matter?
The multiplier matters because we can use it to determine by how
much we should...

Consider a closed economy to which the Keynesian-cross analysis
applies. Consumption is given by the equation C = 200 + MPC(Y – T).
Planned investment (I) is 300, government spending (G) is 300 and
taxes (T) is 300. Assume MPC is equal to 2/3.
(a) If Y is 1,500, what is planned spending? What is inventory
accumulation or decumulation? Is equilibrium Y higher or lower than
1,500?
(b) What is equilibrium Y?
(1 mark)
(c) What are equilibrium consumption, private...

Which of the following is graphed as a horizontal line across
levels of real GDP in the aggregate expenditures model?
the saving schedule
the investment schedule
the consumption schedule
the investment demand curve
The multiplier effect relates changes in
the price level to changes in real GDP.
the interest rate to changes in investment.
disposable income to changes in consumption.
spending to changes in real GDP.
The multiplier can be calculated by
dividing
one by one minus the marginal propensity...

The multiplier will increase if the MPC
Increases
Decreases
Stays the same
Depends on what MPC and what multiplier you are talking
about.
"If the government had an annually balanced budget, so G=T every
year, we would expect"
The economy to be more stable
Injections and leakages to be easier to set equal
The economy to be less stable
Injections to usually be greater than leakages
The multiplier effect:
Lessens upswings and downswings in business activity
Reduces the MPC
Magnifies...

(1)
If the spending
multiplier equals 10 and the actual equilibrium real GDP is $4
billion below potential real GDP, then other things being equal,
_____ to reach the potential real GDP level.
Group of answer choices
autonomous spending
needs to increase by $40 billion
real GDP needs to
increase by $40 billion
autonomous spending
needs to increase by $4 billion
real GDP needs to
increase by $0.4 billion
autonomous spending
needs to increase by $0.4 billion
(2)
Other things...

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