Answer:
Round 2 adds =$800
Round 3 adds =$640
Explanation:
Marginal propensity to consume is the aggregate increase in spending by a consumer for each additional $ they earn. So a Marginal Propensity to consume of 0.8 means that each consumer in the economy consumes 80% of any additional dollars they earn, while they save 20% which is also the marginal propensity to save that is 0.2
So First round adds $1000
Second round adds $1000 * 0.8 = $800 as people use 80% of $1000
Third round adds $800 * 0.8 =$640 as people use 80% of $800
while the remaining is saved.
Hope that helps.
If a government is trying to encourage economic growth, they would do all of these things except raise taxes. Raising taxes has the opposite effect and will slow growth because it takes more money out of the economy that could be used for growth and expansion.
Answer:
A new breakeven point will be determined.
Explanation:
The law of supply and demand suggests that price and quantity equilibrium are determined by the interaction between supply and demand. This breakeven point may vary as supply and demand change. When supply increases the price decreases and when the price decreases the demanded quantity increases. In this way, a new equilibrium price will be determined at a lower value than the previous price.
Answer:
The answer is: 7% annual growth rate
Explanation:
The Rule of 70 is a way to determine how many years it will take an economy to double its GDP (or GDP per capita) with a given annual growth rate.
The formula used by the Rule of 70 is:
number of years = <u> 70 </u>
to double an economy annual percentage growth rate
In this exercise we substitute the known variables and calculate:
10 years = 70 / (annual growth rate)
annual growth rate = 70 / 10 = 7%
Answer:
Economic models like the circular flow diagram are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories.
d) circular flow diagram
Explanation:
Economic models are a form of theoretical construct that consists of economic variables and quantities and the relationships between them. The relationship between the construct forms a basis for hypothesis for economic behavior. Economic models can be used to observe, understand and predict economic behavior. There are different economic models such as;
1. Specialization Model
This is a type of economic model where more attention is given to the production of specific goods and services for better efficiency in terms of time, cost and quality.
2. Financial capital market
This is a type of financial market that provides a platform for the buying and selling of capital in the form of long-term debt and securities. They basically act like a bridge between those who have capital and those who need the capital.
3. Financial investment market
This is also another type of financial market that provides a platform where financial assets and it's equivalent can be traded for the sake of investment. They include; stocks, bonds and assets.
4. Circular flow diagram
This is a type of visual representation that illustrates how money and commodities of trade move in an economy. It is a type of economic model that uses diagrams to represent economic patterns and theories.