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iVinArrow [24]
3 years ago
12

An increase in government spending of $200 million financed by a new tax of $200 million in an economy with a marginal propensit

y to consume of .90 could result in an increase in nominal GDP (assuming a closed economy with no leakages) of up to how much? (a) $0; (b) $2,000 million; (c) $180 million; (d) $200 million.
Business
1 answer:
Savatey [412]3 years ago
4 0

Answer:

(d) $200 million.

Explanation:

For computing the increase in nominal GDP first we have to determine the net tax which is equal to

= 0.90 ×$200 million

= $180 million

So, the net increase in government spending is

= $200 million - $180 million

= $20 million

And, we know that

Multiplier = 1 ÷ (1 - MPC)

= 1 ÷ (1 - 0.9)

= 1 ÷ 0.1

= 10      

So, the increase in nominal GDP is

= $20 million × 10

= $200 million

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4 years ago
When a company is able to expand its operations by exporting globally, it can often achieve greater economies of scale which res
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Learn more about economies of scale here:

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1 year ago
While designing a management support system, it's important to remember that executives do not care about _____.
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Answer:

a. sales figures

Explanation:

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3 years ago
Which of the following was not an effect of the Norris LaGuardia Act?
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U didn’t put like half the question luv
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