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If the mpc is 9 initial GDP is 800 billion government spending falls by 5 billion what is the new level of GDP?
Wiki User
∙ 12y ago
change in y/ change in g = 1/1-mpc... x/5bill= 10 so x= 50bill new level of GDP = 850bill
Wiki User
∙ 12y ago
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Explain why the government consumption expenditures G components of GDP falls short of actual government expenditures?
Government consumption considers spending on defense, judicial system, education, etc... It does not take into account expenditures such as unemployement benefits and social security.
When the government raises taxes what happens to the total output?
falls, because the goverment is able to reduce the defict
What is crowding costs?
In economics, crowding out is a phenomenon occurring when Expansionary Fiscal Policy causes interest rates to rise, thereby reducing investment spending. That means increase in government spending crowds out investment spending.Changes in fiscal policy shifts the IS curve, the curve which describes equilibrium in the goods market. A Fiscal Expansion shifts IS curve to the right from IS1 to IS2. A fiscal expansion increases equilibrium income from Y1 to Y2 and interest rates from i1 to i2. At unchanged interest rates i1, the higher level of government spending increase the level of Aggregate Demand. This increase in demand must be met by rise in output. At each level of interest rate, equilibrim income must rise by the multiplier times the increase in government spending.If the interest rate stayed constant at i1, the goods market is in equilibrium in that planned spending equals output, but the assets market is no longer in equilibrium. Income has increased, and, therefore, the quantity of money demanded is higher. Because there is an excessive demand for real balances, the interest rate rises. Firms planned spending declines at higher interest rates, thus the aggregate demand falls. Therefore, the equilibrium is at higher interest rates. The adjustment of interest rates and their impact on aggregate demand dampen the expansionary effect of the increased government spending.Source: Wikipedia
Assume the US economy is in short-run equilibrium with a price level of 150 and output of 6 billion The money m What is the impact of the Federal Reserve's policy on the equilibrium interest rate?
It Falls
What would the government do if the inflation rate is too high?
The government would aim to constrict money supply in the economy and impose deflationary measures. MV = PY Where M=Money supply, V=Velocity of spending, P=Price Level and Y=Quantity of Output. Assuming that V and Y are constant values in the short run, by constricting M, P therefore falls, meaning disinflation would be experienced. This could be achieved by a raising of interest rates (prompting increased saving) or increased tax (reducing average wealth). Although it could be argued that increasing interest rates attracts hot money into an economy, which would raise the exchange rate and increase MPI, which in itself is inflationary, these effects are negligible when compared to the impact that the change in rate has on spending within the domestic economy.
What is the most likely result of an increase in interest rates a. investment spending rises b. investment spending falls c. the economy speeds up d. unemployment falls?
b. investment spending falls
Explain why the government consumption expenditures G components of GDP falls short of actual government expenditures?
Government consumption considers spending on defense, judicial system, education, etc... It does not take into account expenditures such as unemployement benefits and social security.
How much rain falls in United Kingdom each year?
2 billion ml of water!!
What branch of government is corrections?
The Department of Corrections falls under the Judicial Branch of government in the US.
In which branch of government is Barack Obama?
President Obama falls under the executive branch of government.
Who decides if a government office or business closes or stays open on veterans day?
federal government closing are established by the USA. office of personnel management (OPM).generally ,when a holiday falls on a non-workday--saturday or sunday--the federal government is closed on Monday (if the holiday falls on sunday) or friday(if the holiday falls on Saturday
Where did Justin Bieber get the beat for never let you go?
probably bought it u know him always spending money like it falls out of the sky
How much water falls on average at Niagara Falls in an hour?
About 3.24 billion (3.24*1010) gallons of water per day flows over Niagara Falls.
How many liters of water flows over the Niagara Falls a minute?
110 000 m3 (average); see also http://en.wikipedia.org/wiki/Niagara_Falls.
Who owns Niagra Falls?
No one actually "owns" Niagara Falls. It is part of the Niagara River. The international boundary between Canada and the US runs through the Niagara River. There are three falls at Niagara Falls. The American Falls and the much smaller Bridal Veil Falls are in the US. The spectacular Horseshoe Falls is almost entirely within Canada. Both nations use the water in the river for hydroelectric power. Niagara Falls is a major tourist attraction both in Canada and the US.
How many gallons of water dose Angel Falls drop a year?
I have no idea but if it is 100 milion gallons an hour then it must be over a billion
What is the force of the water at Angel Falls?
According to the "Did you know" website (refer to the link, below):"Although the Angel Falls are much taller than the Niagara Falls . . . they both pour about the same amount of water over their edges - about 2,8 billion litres (748 million gallons) per second."
