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Congress is considering a tax credit program for those who purchase energy-efficient appliances. Proponents of the program have said that $400 million will be given directly to taxpayers and argue that this will have an economic effect that is greater than the original $400 million spent because of the multiplier effect. Many voters and taxpayers are not familiar with the concept of a multiplier in this sense. Your think tank has decided to produce a short report that will help voters better understand the proponents' claims, and Gabe has asked you to write this report.
Be sure to include the following in your report:
Give a basic explanation of how the multiplier concept is computed, including MPC. Assume that the average American's marginal propensity to consume (MPC) is 2/5, and American producers' MPC is also 2/5. Calculate the following, explaining how you arrived at each result: The amount consumers will spend on new consumption The amount of new spending from producers The multiplier in this case The total increase in spending from the primary spending of $400 million Explain the multiplier concept as it applies in this case. What are the qualifications and limitations of the multiplier model?
You can either spend spring break working at home in Alabama for $200 a day for five days, or you can spend the week in Costa Rica where travel expenses will total $700 (food, hotel, and a plane ticket.)
Hillary can invest her family savings in two assets: riskless treasury bills or a risky vacation home real estate project on an Arkansas river. The expected return on treasury bills is 4 percent with a standard deviation of zero.
A pump has faild in a facility that will be completely replaced in 3 years. A brass pump costing $6000 installed will last 3 years. However, a used staniless steel pump that should last 3 more years has been sitting in the maintenance shope for a ..
suppose a single firm produces all of the output in a contestable market. The market inverse demand function is P=100 -Q, and the firm cost's function is C(Q) = 2Q. Determine the firm's equilbrium price and corresponding profits.
Assume that gross private domestic investment is $800 billion and the government (state, local, and federal combined) is currently running a $400 billion deficit. If households and businesses are saving $1,000 billion, what is the value of net exp..
According to the following economic indicators, estimate the outlook of this fictitious economy. Although I know what these indicators mean,
Suppose that BMW can produce any quantity of cars at a constant marginal cost equal to $20,000 and a fixed cost of $10 billion. You are asked to advise the CEO as to what prices and quantities BMW should set for sales in Europe and in the United S..
suppose you purchase a corporate bond with a 0-year maturity, a $1000 par value, a 10% coupon rate, and semiannual interest payments. This means that you receive a $50 interest payment at the end of each six-month period for 10 years (20 times).
A discriminating monopolist faces the demand schedule Pmkt = 225 - Q and MC = 125 a) What is the market-clearing price for the discriminating monopolist b) How much will the monopolist produce c) What is the net profits of the monopolist
If two people have cardinal utility functions, person1 is Utility = XY and person2 is Utility = (XY)^1/3 which bundle would they find to be best Bundle 1: Has an indifference curve of Y = 1/X
Suppose two firms 1 and 2 compete in quantities and face a demand curve p = 100 - q. Suppose firm 1 has a constant marginal cost of 10 while firm 2 has a constant marginal cost of 40. Suppose they produce quantities simultaneously. a.Find quantity..
At a product price of $ 40, how many units will this firm produce in the short-run b)At a product price of $ 50, how many units will this firm produce in the short-run c) At a product price of $ 60, how many units will this firm produce in the short..
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