Author Question: Explain the effects of the following actions on equilibrium income. 1 . Government purchases rise by ... (Read 26 times)

bobbysung

  • Hero Member
  • *****
  • Posts: 519
Explain the effects of the following actions on equilibrium income. 1 . Government purchases rise by 20 billion. 2 . Taxes fall by 20 billion. Assume that the marginal propensity to consume is 0.8.

Question 2

According to Gresham's Law:
 a. money with relatively high intrinsic value will be used for transactions.
  b. money with relatively low intrinsic value will be used for transactions.
  c. money with relatively high intrinsic value will cause inflation.
  d. money with relatively low intrinsic value will cause inflation.
  e. inflation increases the intrinsic value of money.



eliasc0401

  • Sr. Member
  • ****
  • Posts: 338
Answer to Question 1

1 . 100 billion calculated as: 20 billion /(1 - 0.8)
2 . 80 billion calculated as: (-0.8  -20 billion)/(1 - 0.8)

Answer to Question 2

b



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Human neurons are so small that they require a microscope in order to be seen. However, some neurons can be up to 3 feet long, such as those that extend from the spinal cord to the toes.

Did you know?

After a vasectomy, it takes about 12 ejaculations to clear out sperm that were already beyond the blocked area.

Did you know?

Walt Disney helped combat malaria by making an animated film in 1943 called The Winged Scourge. This short film starred the seven dwarfs and taught children that mosquitos transmit malaria, which is a very bad disease. It advocated the killing of mosquitos to stop the disease.

Did you know?

Approximately one in four people diagnosed with diabetes will develop foot problems. Of these, about one-third will require lower extremity amputation.

Did you know?

People who have myopia, or nearsightedness, are not able to see objects at a distance but only up close. It occurs when the cornea is either curved too steeply, the eye is too long, or both. This condition is progressive and worsens with time. More than 100 million people in the United States are nearsighted, but only 20% of those are born with the condition. Diet, eye exercise, drug therapy, and corrective lenses can all help manage nearsightedness.

For a complete list of videos, visit our video library