NVCC Marginal Propensity to Consume and Economics Questions
Description
10.1 If the Marginal Propensity to Consume (MPC) is .90, estimate the total (multiplied) effect of government purchases/spending of $100B in the economy in terms of its aggregate expenditure (Hint: Multiplier = 1 / 1 ย MPC).
Calculate the net cumulative change in the aggregate expenditure if taxes were cut by $200 billion and MPC is estimated to be .75.
What if government expenditure was increased by $200 billion?
(Hint: Total change in expenditure = multiplier x new expenditure or spending injection)
10.2 Explain why a high level of government debt is bad for the economy?
10.3 Why automatic stabilizers help to smooth out the effects of cyclic boom and bust cycles on the economy?
Get your college paper done by experts
Do my questionPlace an order in 3 easy steps. Takes less than 5 mins.
Leave a Reply
Want to join the discussion?Feel free to contribute!