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shusha [124]
4 years ago
6

If the marginal propensity to consume is 0.8, full-employment output is $14 trillion, and current output is $13.5 trillion, then

investment spending must _____ to reach fullemployment output. A) increase by $0.5 trillion B) decrease by $0.5 trillion C) increase by $0.1 trillionD) increase by $0.4 trillion
Business
1 answer:
CaHeK987 [17]4 years ago
3 0

Answer:

c. Increase by $0.1 trillion

Explanation:

Investment spending Multiplier is a concept in economics that measure how a given change in investment increases output. So if current output of $13.5 trillion must increase to $14 trillion, we employ the multiplier formula to derive what amount of investment spending is needed to get $o.5trillion increase in output.

(change in output)/ (change in investment) = 1/(1-mpc)

Note that mpc means marginal propensity to consume.

Let change in investment = X

change in output = 14 - 13.5 = $0.5trillion

mpc = 0.8

(0.5)/X = 1(1-0,8)

0.5/X = 1/0.2

cross multiply

X = 0.1

Thus the needed change in investment is an increase of $0.1 trillion. In other words, if investment increases by $0.1 trillion, current output will increase from $13.5 trillion to $14 trillion.

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Explanation:

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Kobotan [32]

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C

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product differentiation

4 0
4 years ago
There are several economic explanations for why trade is so commonplace. Match each of the examples listed below with the econom
levacccp [35]

Answer:

Explanation:

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2. Specialization or Economies of Scale

C. The ability of developing nations to export textiles to wealthier countries.

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5 0
3 years ago
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Sergeu [11.5K]

Answer:

The correct answer is $2,444.6 billion

Explanation:

FCFE= FCF+ Increase in debt- Interest (1-t)

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Assuming a single period growth rate of 2%,

the forecasted FCFE =$215.7(1+0.02)

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Although this is not available in the options provided ,$220.01 billion is the correct answer.

4 0
3 years ago
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