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Mkey [24]
3 years ago
5

Suppose the economy is operating at an output level of $5,400 billion. Assume furthermore that potential output is $5,000. Which

would be necessary to close this inflationary gap if the marginal propensity to consume is 0.75?
Business
1 answer:
olga2289 [7]3 years ago
4 0

Answer:

The government should decrease spending by $100 billion.

Explanation:

The potential output level of an economy is $5,000 billion.  

The economy is operating at an output level of $5,400 billion.  

We see that there is an inflationary gap of $400 billion as the economy is operating at an output level of $400 billion more than the potential output level.  

The marginal propensity to consume is 0.75.  

ΔY = \frac{1}{1 - MPC}\ \times\ \Delta G

$400 billion = \frac{1}{1 - 0.75}\ \times\ \Delta G

ΔG = \frac{400}{4}

ΔG = $100 billion

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Answer:

Line production system

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Explanation:

Line production system: This system was adopted in manufacturing companies to divide the tasks between the workers so a product can be manufactured in the fastest way possible

Scale of production: The manufacturing industry develop high levels of production that allow surpluses of production of goods in the economy.

Development of Factories: The manufacturing industry was the first in organize the Plant for production purposes. Therefore, the creation of what is nowadays known as factories was a consequence of this organization.

Development of Capital Machinery: Manufacturers Researched and developed new machines to improve the times of production. With time this technology was used for more industries to achieve fast performances.

Development of Capital Goods Industry: As machines were developed the industry of Capital goods arose and became an important source of technology for companies.

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A stock sells for $60. The next dividend will be $3 per share. If the rate of return earned on reinvested funds is 10% and the c
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Answer:

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Explanation:

MV=D1/(Ke-g)

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Read 2 more answers
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