Simple spending multiplier

Reference no: EM13334715

How would i go about doing this problem? I understand how to find the multiplier but i guess the wording of this is throwing me off?

(Simple Spending Multiplier) Suppose that the MPC is 0.8, while investment, government purchases, and net exports sum to $500 billion. Suppose also that the government budget is in balance.

a. What is the sum of saving and net taxes when desired spending equals real GDP? Explain.

b. What is the value of the multiplier?

c. Explain why the multiplier is related to the slope of the consumption function.

Reference no: EM13334715

Questions Cloud

Determine the popular vote of the election : On November 4th, 2008, the United States went to the polls to select a president, choosing between Obama and McCain. Please construct a realistic hierarchy to determine the popular vote of the election. It should have criteria for selecting a presid..

What will the maturity risk premium for the 30 year bond : In contrast, a 10 year Treasury bond has an interest rate of 3.7%. If inflation is expected to average 1.5 percentage points over both the next 10 years and 30 years

Determine what is robinsons cost of retained earnings : The firm can raise debt at a 12% interest rate and the last dividend paid by the firm was $0.90. Robinson 's common stock is selling for $8.59 per share, and its expected growth rate in earnings and dividends is 5%.

Calculate the impedance of the series combination : When only a resistor is connected across the terminals of an ac generator (102 V) that has a fixed frequency, there is a current of 0.495 A in the resistor. calculate the impedance of the series combination

Simple spending multiplier : How would i go about doing this problem? I understand how to find the multiplier but i guess the wording of this is throwing me off? (Simple Spending Multiplier) Suppose that the MPC is 0.8, while investment, government purchases, and net exports sum..

What is the advantage of the advice of the securities firm : Explain the dilemma for Denton Company. What is the advantage of following the advice of the securities firm. What is the disadvantage. Is the securities firm's incentive to place the shares aligned with that of Denton Company.

Define what is the molar solubility of pbi2 in water : What is the molar solubility of PbI2 in water. For PbI2, Ksp=7.9x10-9. You may assume that the ions do not form ion pairs in solution. Give your answer in moles per litre, accurate to two significant figures.

Compute the voltage of the generator : A series RCL circuit includes a resistance of 271 ?, an inductive reactance of 661 ?, and a capacitive reactance of 425 ?. What is the voltage of the generator

What is the gravitational torque on the objects : Two thin beams are joined end-to-end to make a single object. The left beam is 11.9 kg and 1.00 m long and the right one is 41.1 kg and 2.00 m long. What is the gravitational torque on the objects about an axis through its left end

User Account

All Pages