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
AysviL [449]
2 years ago
9

Suppose the government in this economy decides to decrease government purchases by $300 billion. The decrease in government purc

hases will lead to a decrease in income, generating an initial change in consumption equal to . This decreases income yet again, causing a second change in consumption equal to . The total change in demand resulting from the initial change in government spending is .
Business
1 answer:
Zepler [3.9K]2 years ago
6 0

Answer:

Consider a hypothetical closed economy in which households spend $0.80 of each additional dollar they earn and save the remaining $0.20. The marginal propensity to consume (MPC) is <u> 0.80</u><u> </u>, and the multiplier for this economy is <u>   5 </u><u> </u>.

Suppose the government in this economy decides to decrease government purchases by $300 billion. The decrease in government purchases will lead to a decrease in income, generating an initial change in consumption equal to <u>    </u><u>–$240 billion</u><u>    </u>. This decreases income yet again, causing a second change in consumption equal to <u>    </u><u>–$192 billion </u><u>  </u>. The total change in demand resulting from the initial change in government spending is <u>  </u><u>–$1.5 trillion</u><u>   </u>.

Explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question as follows:

Consider a hypothetical closed economy in which households spend $0.80 of each additional dollar they earn and save the remaining $0.20. The marginal propensity to consume (MPC) is <u>              </u>, and the multiplier for this economy is <u>                </u>.

Suppose the government in this economy decides to decrease government purchases by $300 billion. The decrease in government purchases will lead to a decrease in income, generating an initial change in consumption equal to <u>             </u>. This decreases income yet again, causing a second change in consumption equal to <u>                </u>. The total change in demand resulting from the initial change in government spending is <u>                    </u>.

The explanation of the answer is given as follows:

MPC = The portion of the amount households spend of each additional dollar they earn = 0.80

MPS = Marginal propensity to save = 1 - 0.80 = 0.20

Multiplier for this economy = 1 / 0.20 = 5

Change in government purchase = –$300 billion

Initial change in consumption = Change in government purchase * MPC = -$300 * 0.80 = –$240 billion

Second change in consumption = Initial change in consumption * MPC = –$240 billion * 0.80 = –$192 billion

Total change in demand = Change in government purchase * Multiplier for this economy = –$300 billion * 5 = –$1,500 billion, or –$1.5 trillion

You might be interested in
Which of these are examples of opportunity cost?
Irina-Kira [14]

<em>Answer: The opportunity cost is time spent studying and that money to spend on something else. A farmer chooses to plant wheat; the opportunity cost is planting a different crop, or an alternate use of the resources</em>

<em />

<em>Explanation:</em>

6 0
2 years ago
Bonita Corporation had net sales of $2,409,200 and interest revenue of $38,100 during 2020. Expenses for 2020 were cost of goods
____ [38]

Answer:

net income: $ 451,010

EPS:             $           6.32 per share

Explanation:

net sales                   2,409,200

cost of good sold     (1,464,600)

gross profit:                  944,600

operating expenses:

selling expenses         (284,000)

operating income         660,600

non operating:

interest revenue              38,100

interest expense           (54,400)

non operating expense (16,300)

earning before taxes:     644,300

tax expense:  30%          193,260

net income                      451,010

shares outstanding          71,390

Earning per share: 451,010/71,390 = 6,31755

4 0
3 years ago
Many people think that marketing and advertising are one and the same. While advertising is indeed part of marketing, it is only
belka [17]
I can't tell but I'm thinking it's either A B or E I hope
3 0
3 years ago
A form prepared periodically for each processing department summarizing (1) the units for which the department is accountable an
Kruka [31]

Answer:

B. cost of production report

Explanation:

The cost of production report summarizes all cost activities and its allocation in a department within a specified period of time. It contains the cost for each unit, amount of unit flow, difficulties faced during production.

The factory overhead production report compares actual fixed and variable cost to standard fixed and variable costs. Fixed cost are rent, taxes while variable cost are indirect labor, utilities.

manufacturing cost report contains all costs involved during the manufacturing of a goods such as cost of raw materials and direct labor.

process cost report summarizes the quantity of goods produced in each department as well as the cost incurred by each department.

4 0
3 years ago
Read 2 more answers
Explain two situations where scarcity effects you
s344n2d4d5 [400]
When I got into a crash ig
4 0
3 years ago
Read 2 more answers
Other questions:
  • Pizza hut provides the use of its name plus operating know-how to companies in costa rica in return for a fee plus a percentage
    9·1 answer
  • Are real people answering these questions? Do u get paid?
    14·1 answer
  • Hardwoods, a timber supplying company, contracted with a furniture manufacturer, Taylor Furniture. Hardwoods owned a large plot
    15·1 answer
  • 2. What would you say to some who said that citizens had no right to know where their federal income tax money goes?
    5·1 answer
  • Ann lives in Princeton, New Jersey, and commutes by train each day to her job in New York City (20 round trips per month). When
    14·1 answer
  • Bonita earns $31,000 from her job, and she has $1,000 of interest income. She has itemized deductions of $35,000. There are no c
    11·1 answer
  • How a company can achieve lower production costs and increase productivity
    10·1 answer
  • Around the world oil is priced consistently in United States dollars. In economic terms this is an example of:
    8·1 answer
  • Please Help soon
    14·1 answer
  • In an organization with compensation that has ______ outcome interdependence, a(n) ______ portion of the employee's pay depends
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!