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Serhud [2]
3 years ago
6

If the marginal propensity to consume is 0.80, what is the total implied increase in economic spending activity from a governmen

t stimulus of $100 billion? Type an answer and press enter to submit billion dollars
Business
2 answers:
Rzqust [24]3 years ago
7 0

\$500 is the total implied increase in economic spending activity from a government stimulus of \$100 billion

<u>Explanation: </u>

The median product preference tests the increase in expenditure due to changes in availability.

In increasing government expenditure, total economic investment would be increased by the scale of the budget multiplier. In other terms, the expenditure equation indicates how much GDP can increase as government expenditure increases.

The spending multiplier can be expressed as \frac{1}{1-M P C} \text { or } \frac{1}{M P S}

\text { Increase in GDP }=\frac{1}{1-M P C} \times \Delta G=\frac{1}{1-0.8} \times 100=\$ 500

So, the total implied increase in economic spending is \$ 500

In economics, marginal propensity to consume (MPC) is the proportion of an aggregate raise in pay that consumer spends on the consumption of services and goods, as opposed to saving it.

kirza4 [7]3 years ago
4 0

Is known :

<em>ΔTC = $ 800 million (yield of $ 100.8 billion - $ 100 billion)</em>

ΔQ =?

Information:

<em>MC = Marginal Fee</em>

<em>ΔTC = Change in Total Costs</em>

ΔQ = Change in Amount of Output

<em>ΔQ = ΔTC * MC</em>

<em>ΔQ = $ 800 million * 0.80</em>

ΔQ = 640 million units

<h2>Further explanation</h2>

Marginal Costs are additional costs incurred when producing one additional product unit. This Marginal Cost shows the level at which the total cost of product changes when production increases by one unit. The purpose of analyzing these marginal costs is to determine at what point a company can achieve economies of scale.

Marginal costs are very important in the business decision-making process where management must make decisions about the allocation of resources in the production process. For example, when management needs to decide whether or not to increase production, they must compare marginal costs with marginal revenue that will be realized by additional units of output. This comparison is needed to determine whether the company will add the number of production units.

It should be noted that for most production scenarios, production costs are not at the beginning of production and then decrease with increasing amounts of certain products.

Learn more

marginal cost brainly.com/question/13944395

business decision-making brainly.com/question/13990137

Details

Class: high school

Subject: Business

Keywords: cost, marginal, business

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