GDP stands for gross domestic product.
MPC stands for marginal propensity to consume (the ratio of the ratio of change in consumption to change in income)
From MPC you obtain the GDP Multiplier, which gives the relationship between a change in a particular expenditure and the GDP.
This is: Change in GDP = Mutliplier * Change in expenditure
The multiplier is equal to 1 / [ 1 - MPC].
Now use that information to calculations.
<span>Change in GDP with MPC of 0.9
multiplier = 1 / [1 - 0.9 ] = 1 / 0.1 = 10
Change in GDP = 8 billions*10 = 80 billions.
Change in GDP with MPC of 0.8 </span>
multiplier = 1 / [1 - 0.8] = 1 /0.2 = 5
Change in GDP = 8 billions*5 = 40 billions
Answer:
The correct answer is C.
Explanation:
Giving the following information:
Process X has fixed costs of $10,000 and variable costs of $2.40 per unit. Process Y has fixed costs of $9,000 and variable costs of $2.25 per unit.
X= 10,000 + 2.4*x
Y=9000 + 2.25y
We will suppose 5 levels of production
1 units, 1000 units , 5550 units, 20,000 units, 110,111 units.
1 unit:
X= $10,002.4
Y= $9,002.25
1000 units:
X= $12,400
Y= $11,250
5550 units:
X= $23,320
Y= $21,487.5
20,000 units:
X= $58,000
Y= $54,000
110,111 units:
X= $274,266.4
Y= $256,749.75
Process Y has a lower fixed cost and a lower variable cost. In all quantities of production, it will present a lower total cost compare to Process X.
Answer:
The increase in reserve will ultimately lead to an increase in the money supplied.
Explanation:
From the scenario under study, the bank is greeted with uncertain economic realities. To cope with this, the bank resolves that rather than lend out excess reserves, it should rather increase the percentage of deposits held as reserve from 10% to 25%. Thus, this leads to a multiplier effect. And the reserve ratio from the forgoing is 1 to 4. That is, 1/10 to 1/4. Meaning there's a reduction in multiplier effecf of 10 to 4. And looking critically, this is a reciprocal of the new reserve ratio of 1/4
When bank hold more reserve, the ripple effect is that the Fed would buy more bonds. To increase the money supply by $200, however, the Fed will need to get a bond of $50.
The implication of this is that the bank reserve will rise in same amount. But taking the multiplier effect into cognizance, a small multiplier will be occasioned in form:
$50 * 4= $200.
Effectively, we have increased the money supply by $200, owing to the multiplier effect.
Answer:
Pay the claim and the accident occurred during the grace period
Explanation:
Grace period is the period or the set length of the time after the due date during that the payment is to be made without any penalty by the insurer or the person.
The grace period mostly is of 15 days and it is usually involves in the insurance contact and the mortgage loan.
So, in this case, the insurer forget to pay the premium but on march 19, she met with an accident and broke her leg, then the insurance company will be paying the claim as the accident happened during the grace period.
