Illustrate in the following graph the impact of a sudden decline in consumer confidence that reduces autonomous

Question:

Illustrate in the following graph the impact of a sudden decline in consumer confidence that reduces autonomous consumption by $100 billion at the price level P_F. Assume MPC = 0.5.

(a) What is the new equilibrium level of real output? (Don’t forget the multiplier.)

(b) How large is the real GDP gap?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

The Macro Economy Today

ISBN: 978-1259291821

14th edition

Authors: Bradley R. Schiller, Karen Gebhardt

See More Books

Question Posted: May 03, 2018 09:24 AM

See More Questions

a. Complete the following table when autonomous consumption is $30 billion, the marginal propensity to consume is 0.85, and net taxes are $0. b. Use your answers in part (a) and assume planned...
Assume the following equations summarize the structure of a small open economy with a flexible exchange rate system. C = Ca + 0.85(Y - T) Ca = 200 - 8r T = 200 + 0.2Y (M/P)d = 0.25Y - 25r Ms/P =...
1. In our simple model, if C = 100 + 0.8y, and I = 50, equilibrium output will be ______. 2. If in Exercise 3.1 I increase to 100, a. The equilibrium income will be ______. b. The multiplier is...
1. Debate whether or not online retailers should be required to collect state sales taxes. Suggest an equitable solution to this issue. 2. Research online tax rules. Look specifically at the 1992...
1. If there exists an n n matrix A1 such that AA1 = In = A1A, then A1 is the ________ of A. 2. A matrix that has an inverse is invertible or ________. A matrix that does not have an inverse is...
The perimeter, P, of a rectangle with length l and width w is given by the formula P = 2l + 2w. The area, A, is given by the formula A = lw. In Exercises 119120, use these formulas to find the...
Read the study by Lingguang Song cited in the End Notes or a similar study about the use of earned value management. Summarize the findings and your opinions of the study and the use of earned value...
Davison Carecenters Inc. provides financing and capital to the health-care industry, with a particular focus on nursing homes for the elderly. The following selected transactions relate to bonds...
An ARM with 2/6 interest rate caps (2% annual and 6% lifetime cap) and a 2.50 margin has a contract rate of 5% for the first year. At the end of year one index value is 4.00%. The contract rate for...
Troy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its engines, including all of the carburetors. An...
Suppose that investment demand increases by $300 billion in a closed and private economy (no government or foreign trade). Assume further that households have a marginal propensity to consume of 75...
By how much did annualized consumption decline in November 2008 when GDP was $14 trillion?
Solve each equation. Check the solutions. 2 x + 1 + 3 x + 2 || 7 2
Write a java program that contain two overloaded methods that accepts two numbers or two characters representing a range example (11, 37) or (c, w) inputted by the user. The method generates a random...
Maggie could not conceive a child using natural means, so she sought out a woman who would donate an egg to be surgically implanted in Maggie. Which of the following items are deductible by Maggie in...
M corporation is subject to tax only in state b state b law provides for the use of federal taxable income before net operating loss and special deductions as the starting point for computing state...
Use Routh Criteria to determine the values of K needed for the system represented by the Characteristic Equation to be stable. (1 + K)s + (2K + 3)s + 2 3K = 0 Obtain the root locus plot for the...
Q7 a) Two forces equal to 2P and P act on a particle. If the first be doubled and second is increased by 12N, the direction of resultant remains unaltered. Find the value of P (5)
For each f(x), complete the following. (a) Find the x- and y-intercepts. (b) Determine the multiplicity of each zero of f. (c) Sketch a graph of y = f(x) by hand. f(x) = -(x + 1)
Find a polar equation for the curve represented by the given Cartesian equation. 4y 2 = x
The production activities deduction is available based only on income related to U.S. production activities (or taxable income, if a smaller amount). Why did Congress restrict the calculation of the...
Spurrier Corporations taxable income is $50,000, and its tax preference items and positive adjustments for the alternative minimum tax (AMT) are $100,000. a. Is Spurrier subject to the AMT (assume...
Current tax law provides for a dual system, the regular tax and alternative minimum tax. In effect, a corporation pays the greater of the regular tax or the tentative minimum tax. Why did Congress...
Read the following and then answer the questions below:September 12: A Brisbane business offers by letter to sell 500 tyres to a New Zealand company. The Brisbane company does not specify a method of...
Fred returns home from work one day to discover his house surrounded by police. His wife is being held hostage and threatened by her captor. Fred pleads with the police to rescue her and offers...
Would like you to revisit one of these. Consideration must be clear and measurable.if you can't measure it then how can you show it has / has not been done?How can you sue someone for breach of...

Illustrate in the following graph the impact of a sudden decline in consumer confidence that reduces autonomous

Question:

Step by Step Answer:

a 300 billion b 200 billion c Decrease Feedback a 300 billion The new equilibrium level o...View the full answer

The Macro Economy Today

Students also viewed these Business questions