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Elena L [17]
3 years ago
7

An economy is operating with output $400 billion below its natural level, and fiscal policymakers want to close this recessionar

y gap. The central bank agrees to adjust the money supply to hold the interest rate constant, so there is no crowding out The marginal propensity to consume is 4/5, and the price level is completely fixed in the short run. In what direction and by how much would government spending need to change to close the recessionary gap? Explain your thinking.
Business
1 answer:
Alina [70]3 years ago
8 0

Answer:

The government should increase spending in an upward direction by $80 billion.

Explanation:

The output of the economy is = $400 billion.

Given marginal propensity to consume = 4/5  or 0.8

Now use the fiscal multiplier method

ΔY/ΔG = 1/1-MPC

To increase output (Y) by 400 billion, so ΔY = 5. MPC = .8

Now, we have to insert this information into the equation and find the value of ΔG

400/ΔG = 1/1-.8

400/ΔG = 1/.2

400/ΔG = 5

400 = 5*ΔG

80 = ΔG

The government should increase spending by $80 billion.

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Answer:

The correct answer is B. the Credit Cardholders' Bill of Rights.

Explanation:

Basically, the new rule is intended to protect consumers from an arbitrary increase in interest rates, fees, and other finance charges, and prohibits banks from raising interest based on the customer's past due payment history with another banking institution. In addition, entities must allow customers to pay their bills online or by phone, without charging an additional fee, and must notify 45 days in advance of any change in interest rates so that the customer has enough time to review the new terms.

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How do you write a check?
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In Fiedler's contingency theory, the term ____ refers to the degree to which leaders are able to hire, fire, reward, and punish
Lina20 [59]
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4 0
3 years ago
During 2004, Thor Lab supplied hospitals with a comprehensive diagnostic kit for $120. At a volume of 80,000 kits, Thor had fixe
Diano4ka-milaya [45]

Answer:

d. $240.00

Explanation:

Calculation to determine what should the 2005 price be if Thor is to make the same $200,000 profit before income taxes?

2004 CM% = 12.5% ($15/$120)

2005 CM = $2,400,000 ($1,000,000 + $200,000)

2005 CM per unit = $2,400,000/80,000 units

2005 CM per unit= $30 CM per unit;

2005 selling price per unit = $30/.125

2005 selling price per unit= $240

Therefore what should the 2005 price be if Thor is to make the same $200,000 profit before income taxes is $240

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2 years ago
Sheridan Company has received a shipment of suits that cost $140 each. If the company uses cost-plus pricing and applies a marku
timama [110]

Answer:

Selling price= $224

Explanation:

Giving the following information:

Unitary purchase cost= $140

Mark-up percentage= 60%

<u>To calculate the selling price per unit, we need to use the following formula:</u>

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Selling price= 140*1.6

Selling price= $224

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3 years ago
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