This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: If the marginal propensity to consume is 0.8 and if government spending (G) rises by 50 while ... (Read 72 times)

Alygatorr01285

  • Hero Member
  • *****
  • Posts: 564
on: Jun 30, 2018
If the marginal propensity to consume is 0.8 and if government spending (G) rises by 50 while investment (I) falls by 20, by how much will equilibrium income rise?
 
  a. 12
  b. 10
  c. 30
  d. 120
  e. 150

Question 2

What are the effects of a financial crisis on short-run aggregate supply? How might long-run aggregate supply be affected?
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

livaneabi

  • Sr. Member
  • ****
  • Posts: 328
Reply #1 on: Jun 30, 2018
Answer to Question 1

E

Answer to Question 2

A financial crisis affects short-run aggregate supply by first affecting aggregate demand. The decline in economic activity that results from disruption of credit markets causes output to fall below potential output. The resulting slack in the economy prevents producers from raising prices as much as they otherwise would, so both inflation and expected inflation decline, shifting the SRAS curve down. If the financial sector's ability to channel funds to productive opportunities is not quickly restored, businesses will be unable to utilize resources as efficiently as before; the long-run aggregate supply curve has shifted to the left.


Alygatorr01285

  • Member
  • Posts: 564
Reply 2 on: Jun 30, 2018
Excellent

Chelseyj.hasty

  • Member
  • Posts: 319
Reply 3 on: Yesterday
Wow, this really help

« previous next »
 

Did you know?

Blood is approximately twice as thick as water because of the cells and other components found in it.

Did you know?

Malaria was not eliminated in the United States until 1951. The term eliminated means that no new cases arise in a country for 3 years.

Did you know?

Not getting enough sleep can greatly weaken the immune system. Lack of sleep makes you more likely to catch a cold, or more difficult to fight off an infection.

Did you know?

As of mid-2016, 18.2 million people were receiving advanced retroviral therapy (ART) worldwide. This represents between 43–50% of the 34–39.8 million people living with HIV.

Did you know?

In the United States, there is a birth every 8 seconds, according to the U.S. Census Bureau's Population Clock.

Primates exhibit prolonged life histories, spending more time in each stage of life than most other Primates exhibit prolonged life histories, spending more time in each stage of life than most other
In 2008, the U.S. economy suffered a gaping wound as several trillion dollars were ripped out of it. In 2008, the U.S. economy suffered a gaping wound as several trillion dollars were ripped out of it.
In 2009, historian Woody Holton described how Abigail Adams shrewdly invested in the Continental Con In 2009, historian Woody Holton described how Abigail Adams shrewdly invested in the Continental Con
A passenger train crosses Stony Creek Bridge in the Rocky Mountains in 1878. Railroads were importan A passenger train crosses Stony Creek Bridge in the Rocky Mountains in 1878. Railroads were importan
When the O2S voltage rises above 450 mV, the PCM starts to control the fuel mixture based on ... When the O2S voltage rises above 450 mV, the PCM starts to control the fuel mixture based on ...
People with night eating syndrome may consume more than half their day's calories between 8 pm ... People with night eating syndrome may consume more than half their day's calories between 8 pm ...
Video: Deglutition

For a complete list of videos, visit our video library