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
Natasha2012 [34]
4 years ago
8

Suppose housing prices and stock prices decline significantly and cause autonomous consumption spending to decrease by $200 bill

ion. If the marginal propensity to consume equals 0.50, how much will equilibrium real GDP change
Business
1 answer:
kirill [66]4 years ago
4 0

Answer: The change will be $400 billion.

Explanation: The marginal propensity to consume (MPC) is used to explain that increase in consumption is as a result of increase in income.

To calculate how much the equilibrium real GDP will change:

STEP1: CALCULATE THE MULTIPLIERS

multipliers = 1 ÷ (1 - MPC)

Where MPC = 0.

Therefore;

Multipliers = 1 ÷ (1 - 0.5) = 1 ÷ 0.5

Multipliers = 2

STEP 2: CALCULATE HOW MUCH THE EQUILIBRIUM REAL GDP WILL CHANGE;

Multipliers × change in consumption spending

2 × $200 billion = $400 billion

Equilibrium real GDP will change with $400 billion

You might be interested in
If a company wanted to finance the purchase of equipment without diluting shareholders equity, which of the following operation
Jobisdone [24]

Answer:

Issuing convertible bonds

Explanation:

Convertible bonds are corporate bonds that can be exchanged for common stock in the issuing company. Companies issue convertible bonds to lower the coupon rate on debt and to delay dilution. A bond's conversion ratio determines how many shares an investor will get for it.

5 0
2 years ago
If monopolistic competitors must expect a process of entry and exit like perfectly competitive firms, Group of answer choices
Colt1911 [192]

Answer:

D. they will be unable to earn higher-than-normal profits in the long run.

Explanation: A monopolistic competition is a form of imperfect Competition where many firms that are located within a give market are known to offer similar products to the markets that are not enough to qualify them as a perfect close Substitute (the Purchase of one of the close Substitute does not necessarily prevent the purchase of another). in this type of imperfect Competition the possibility of a barrier to entry or exit is generally low.

6 0
4 years ago
Read 2 more answers
Research conducted on firms' dividend policies over time support which one of the following conclusions?A. Aggregate dividends a
liberstina [14]

Answer:

The correct option is C.

Explanation:

When the research is taken place or conducted on the dividend of the firm, so this support the conclusion that the managers tend to change or smooth the dividends as the research is conducted in order to find out that the established dividend policy will not affecting the business or firm in any manner and if something affecting then managers could change or smooth the dividends for the benefit of the business.

The Correct option is C.

8 0
3 years ago
Suppose that the central bank must follow a rule that requires it to increase the money supply when the price level falls and de
KatRina [158]

Answer: Option (c) is correct.

Explanation:

Correct Option: Decrease the money supply, which will move output back towards its long-run level.

If the economy is in long run equilibrium and there is a rightward shift in the aggregate demand curve then as a result output and price level rises in an economy.

Here, the central must follow the contractionary monetary policy to stabilize the economy.

So, the central bank must decrease the money supply to move the output and price level back to its initial position.  

6 0
4 years ago
You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 1717 years. You expect tha
jeka57 [31]

Answer:

Present value = $45,185,606

Explanation:

Data:

number of periods(n) = 17 years

First-year profit = $5 million

Growth rate = 2%

Interest rate = 10%

Present value = ?

Solution:

The present value of the growing annuity can be calculated as follows

Formula:

Let's denote

annual interest rate = x

annual growth rate = y

Present value = First-year profit x (\frac{1-(\frac{1+y}{1+x} )^{n} }{x-y} )

Present value = $5,000,000 x (\frac{1-(\frac{1+0.02}{1+0.1} )^{17} }{0.1-0.02} )

Present value = $5,000,000 x 9.03

Present value = $45,185,606

7 0
3 years ago
Other questions:
  • Participating in extracurricular activities in hush school helps
    11·1 answer
  • Matt's Machine Company has borrowed $10 million for four months at 5.5% APR, using inventory stored in a field warehouse as coll
    15·1 answer
  • Consider the following sequence of events: Congress passes a bill. The president vetoes it. Congress overrides the veto. The bil
    10·1 answer
  • How does your current ( or future) employment affect your Social Security or Medicare benefits?
    12·1 answer
  • According to the___________ , people differ in how much they want power, achievement, and affiliation. In order to motivate empl
    15·1 answer
  • What is the discount factor that is equivalent to a 6​% discount​ rate?
    11·1 answer
  • A paid advertisement for the Texas Department of Economic Development, Tourism Division, invited readers of a magazine to mail i
    14·1 answer
  • You have $100,000 in your retirement fund that is earning 5.5 percent per year, compounded quarterly. a. How many dollars in wit
    5·1 answer
  • Required: 1-a. Prepare a contribution format income statement for the game last year. 1-b. Compute the degree of operating lever
    7·1 answer
  • Suppose you are planning a summer vacation and book a hotel room online for $149 a night. However, when you get to the reservati
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!