1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
11Alexandr11 [23.1K]
3 years ago
11

Suppose that consumers become more pessimistic about the future and, as a result, reduce their consumption by $10 billion. If th

e marginal propensity to consume is 0.80, how will this $10 billion reduction in consumption affect the equilibrium level of real GDP? Group of answer choices Real GDP will decrease by $8 billion. Real GDP will decrease by $10 billion. Real GDP will decrease by $40 billion. Real GDP will decrease by $50 billion.
Business
1 answer:
iragen [17]3 years ago
4 0

Answer:

Real GDP will decrease by $50 billion.

Explanation:

In order to calculate the net effect of a reduction in consumption of $10 billion, we need to identify the multiplier first.

Multiplier = 1 / marginal propensity to save

Marginal propensity = 1 - marginal propensity to consume = 1-0.8 = 0.2

Multiplier = 1 /0.2 = 5

The net change then of a reduction by 10 billion = 10 * 5 = $50 billion

Hope that helps.

You might be interested in
Suppose a consumer buys a Perfect Pizza frozen cheese pizza at the grocery store for $10. Perfect Pizza purchased the dough and
miskamm [114]

Answer:

The GDP of consumption price is increasing by $10

Explanation:

Consumption price GDP is that by $10 And the price of tomato sauce and cheese is indirect cost and that cost is the demand and we can't apply that directly. These costs may indirectly be used for calculated GDP.  

So, in the question given, consumers bought the Pizza from the $10 grocery store and tomato sauce and cheese is the intermediate cost so they can't add it directly.

Therefore, The GDP of consumption price is increasing by $10

8 0
3 years ago
Assume that in January 2017, the average house price in a particular area was $279,400. In January 2002, the average price was $
tatyana61 [14]

Answer:

2.38%

Explanation:

In January 2017 the average house price in an area was $279,400

In January 2002 the average house price was $196,300

Therefore the annual increase in selling price can be calculated as follows

t = 15

= ($279,400/$196,300)^1/15 -1

= 1.42333^0.06666 -1

= 1.02378 -1

= 0.02378 ×100

= 2.38%

Hence the annual increase in selling price is 2.38%

4 0
3 years ago
The Parvizians own several oriental rug stores in and around the Washington, DC, metropolitan area. It is expected that as each
Alex777 [14]

Answer:

The correct answer is (b)

Explanation:

It is generally said that if you’re in a family business you are in a partnership. The partvizians is a family which owns several rug stores. When their children will take over the business they will be considered partners. They will own the business equally and they will share the profits and losses.  It is also known as a family-owned business where two or more family members run a business and act as business partners.

6 0
3 years ago
Mr. Rios decided to make a business in his class by selling AP review books for all AP students. His fixed cost to begin the bus
DIA [1.3K]

Answer:

134 books

Explanation:

The breakeven point is the number of units to be sold that will make the total sales equivalent with the total cost, such that the company neither makes a profit nor a loss.

Let the number of units sold to break even be c

5c = 1.25c + 500

5c - 1.25c = 500

3.75c = 500

c = 500/3.75

c = 133.33

≈ 134 books

8 0
3 years ago
Read 2 more answers
Today, you turn 23. your birthday wish is that you will be a millionaire by your 40th birthday. in an attempt to reach this goal
Degger [83]

dude thats easy all u have to do is multiply 40 and 50


4 0
4 years ago
Other questions:
  • What is the best tips to create a business (im just 14 years old i got interested on profit theres agame where a i profit)(the g
    13·1 answer
  • Compute the present value of a $100 investment made 6 months, 5 years, and 10 years from now at 4 percent interest. Instructions
    8·1 answer
  • Q 6.30: Rollins Technology is determining ending inventory. In the inventory process, Rollins inadvertently miscategorized a $9,
    14·1 answer
  • eserve deposits are A. liabilities for both financial institutions and the Fed. B. assets for both financial institutions and th
    12·1 answer
  • Consider the data above (in billions of dollars) for an economy: Gross domesticproduct (in billions of dollars) for this economy
    5·1 answer
  • Rabia doesn’t currently have a job but declined a job offer because she feels her job skills Merritt better pay and a better pos
    5·1 answer
  • An example of a topic that microeconomists study is
    6·1 answer
  • Rhubarb pie is a dessert. therefore, whoever eats rhubarb pie eats a dessert
    12·1 answer
  • Jarvis wants to invest equal semiannual payments in order to have $10,000 at the end of 20 years. Assuming that Jarvis will earn
    7·1 answer
  • All else being equal, an overseas source with lower production cost will become relatively more attractive as
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!