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oksian1 [2.3K]
3 years ago
8

Suppose the marginal propensity to consume is 0.75 and the government spending multiplier is 4. If the government decreases its

purchases by $100 million, the aggregate demand curve will shift to the by $ million. If the government increases income taxes by $100 million, the aggregate demand curve will shift to the by $ million.
Business
1 answer:
kvasek [131]3 years ago
5 0

Answer:

Left by $400; Left by $300

Explanation:

Given that,

Marginal propensity to consume, MPC = 0.75

Government spending multiplier = 4

(a) If the government decreases its purchases by $100 million, then the magnitude of the shift in aggregate demand curve is calculated by multiplying the change in government spending to the government spending multiplier.

Aggregate demand curve shift left by

= Change in government spending × Government spending multiplier

= $100 × 4

= $400 million

(b) If the government increases income taxes by $100 million, then the magnitude of the shift in aggregate demand curve is calculated by multiplying the change in taxes to the tax multiplier.

Tax multiplier:

= MPC ÷ (1 - MPC)

= 0.75 ÷ (1 - 0.75)

= 0.75 ÷ 0.25

= 3

Aggregate demand curve shift left by

= Change in taxes × Tax multiplier

= $100 × 3

= $300 million

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3 years ago
Fiona is employed by Hallmark Cards, Inc., where her responsibilities include maintaining displays of greeting cards in drugstor
Viefleur [7K]

Answer:

These are the options for the question:

a. specialty-line wholesalers.

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d. in-store maintainers.

e. rack jobbers.

And this is the correct answer:

c. full-service stockers.

Explanation:

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7 0
3 years ago
You are to receive the following payments at the end of the following periods:
dangina [55]

Answer: $12,113.14

Explanation:

Find out the future value of each payment 20 years from now then sum up the values.

Year 1:

= 250 * ( 1 + 15%)¹⁹

= $3,557.94

Year 2:

= 300 * ( 1 + 15%)¹⁸

= $3,712.636

Year 3:

= 450 * ( 1 + 15%)¹⁷

= $4,842.5688

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4 0
2 years ago
Required information E12-3 Understanding the Computation of Cash Flows from Operating Activities (Indirect Method) [LO 12-2] [Th
kompoz [17]

Answer:

Net income = $320

Net cash flow from Operating activity = $145

Explanation:

The journal entries are shown below:

1. Cash A/c Dr $485

        To Service revenue A/c $485

(Being sales service is provided for cash)

2. Salary expense A/c Dr $165

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              To Salary and wages payable A/c  $340

(Being salary expense is recorded)

Salary and wages payable A/c  $340

       To Cash $340

(Being salary and wages are paid)

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= $485 - $165

= $320

Cash flow from Operating activities under the indirect method  

Net income $320

Less: Decrease in salary payable - $175

Net Cash flow from Operating activities $145

4 0
3 years ago
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