Chapter 10: Macroeconomic objective (page 196)
Which factors are affected when the government implements an expansionary fiscal policy?
components of AD
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In what direction will each of the following occurrences shift the consumption and saving schedules, other things equal?
In year 1, Adam earns \(1,000 and saves \)100. In year 2, Adam gets a \(500 raise so that he earns a total of \)1,500. Out of that \(1,500, he saves \)200. What is Adam’s MPC out of his $500 raise?
0.50
0.75
0.80
1.00
In what direction will each of the following occurrences shift the investment demand curve, other things equal?
An increase in unused production capacity occurs.
Business taxes decline.
The cost of acquiring equipment falls.
Widespread pessimism arises about future business conditions and sales revenues.
A major new technological breakthrough creates prospects for a wide range of profitable new products.
Refer to the table below.
Fill in the missing numbers in the table.
What is the breakeven level of income in the table? What is the term that economists use for the saving situation shown at the $240 level of income?
For each of the following items, indicate whether the value in the table is either constant or variable as income changes: the MPS, the APC, the MPC, the APS.
What will the multiplier be when the MPS is 0, 0.4, 0.6, and 1? What will it be when the MPC is 1, 0.90, 0.67, 0.50, and 0? How much of a change in GDP will result if firms increase their level of investment by $8 billion and the MPC is 0.80? If the MPC instead is 0.67?
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