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The multiplier and the MPC
Consider two closed economies that are identical except for their marginal propensity to consume (MPC). Each economy is currently in equilibrium with real GDP and total expenditure equal to $100 billion, as shown by the black points on the following two graphs. Neither economy has taxes that change with income. The grey lines show the 45-degree line on each graph. The first economy's MPC is 0.5. Therefore, its initial total expenditure line has a slope of 0.5 and passes through the point (100, 100). The second economy's MPC is 0.75. Therefore, its initial total expenditure line has a slope of 0.75 and passes through the point (100, 100). Now, suppose there is an increase of $20 billion in investment in each economy. Place a green line (triangle symbol) on each of the previous graphs to indicate the new total expenditure line for each economy. Then place a black point (plus symbol) on each graph showing the new level of equilibrium output. (Hint: You can see the slope and vertical axis intercept of a line on the graph by selecting it.)
Under which circumstances is it best for a speculator seeking a capital gain to purchase bonds and If the market interest rates on other similar bonds decreases, you can be sure that?
Explain how the Laws of Supply and Demand are illustrated in this graph. Assume that the government imposes a price floor of $12 in the E-Book market. Explain what would happen in this market.
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Explain at least two limitations of the use of GDP in aggregate accounting
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what is likely to happen to the curve if wage indexation becomes more widespread? Illustrate your answer on the graph.
One such proposal would have required the U.S. and Mexican governments to consult at least every three months to review data on both countries' sugar markets; to establish a permanent joint sugar commission to coordinate national sugar policies, m..
The financial crisis of 2008 caused macroeconomists to rethink monetary and fiscal policies. Economists, financial experts, and government policy makers are victims of what former Fed chairman Alan Greenspan called a "once in a century credit tsun..
A coal mining company has a supply curve of W=48 + (72/2000)L and Demand of P= 60- (9/4000)Q. coal miners produce 8 tons of coal a day. they max profit.
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Consider the following situations. Evaluate how they would affect the level of productivity of labour.
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