By how much the gdp is supposed to rise

Reference no: EM13222099

Suppose MPI = 0.2 and MPC = 0.6
If AD goes up by 40, since the multiplier is 5, GDP will rise by 200. But WHAT in GDP will rise? It will rise by 40 (because MPI=0.2) and C will rise by 120 (because MPC=0.6). But 40 + 120 only reaches 160 and GDP is supposed to rise by 200. So something else needs to rise by 40. What is it? One book claimed it is Sp. Is this correct?

Reference no: EM13222099

Questions Cloud

Discuss how time costs affect health care demand : Discuss how time costs affect health care demand, and speculate on this and possible other reasons for the lower observed per capita demand for health care in the western United States. Suppose a household does not carry health insurance. Can we co..

What is its impact on the ability of an organization : Select one commandment of implementing change. What is its impact on the ability of an organization to respond rapidly to market conditions?

How much money would a typical consumer save each month : Based on your research, AT&T has spent over $15 million on related paperwork and compliance costs, Moreover, depending on the locale, telecom taxes can amount to as much as 25 percent of a consumer's phone bill. These high tax rates on telecom ser..

When does marginal social benefit equal marginal social cost : Discuss perfect competition and long-run equilibrium. Provide detailed descriptions, definitions and concrete examples of your findings. Additionally, how does the proliferation of global trade and competition contribute to markets moving more awa..

By how much the gdp is supposed to rise : If AD goes up by 40, since the multiplier is 5, GDP will rise by 200. But WHAT in GDP will rise. I see that I will rise by 40 (because MPI=0.2) and C will rise by 120 (because MPC=0.6). But 40 + 120 only reaches 160 and GDP is supposed to rise by ..

When most people think that traveling is fun : In their song "Homeward Bound", Simon and Garfunkel talk about a singer on the road who has grown tired of the road. In part they say: Everyday's an endless stream Of cigarettes and magazines And each town looks the same to me The movies and the fac..

What is the percentage change in the real price : The following table shows the average retail price of butter and the Consumer Price Index from 1980 to 2000, scaled so that the CPI = 100 in 1980. 1980 1985 1990 1995 2000 CPI 100 130.58 158.56 184.95 208.98 Retail price of butter (salted, grade AA..

Find how much tax would the government collect : Briefly summarize the impact of an oil import tax by explaining who is helped and who is hurt among the following groups: domestic oil consumers, domestic oil producers, foreign oil producers, and the US government.

What must be the net value of hydrogen produced per year : A green algae, can produce hydrogen when temporarily deprived of sulfur for up to 2 days at a time. A company needs to purchase equipment costing $3.4 million. If the company wants to earn a rate of return of 20% per year and recover its investmen..

User Account

All Pages