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 29 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
Thanks for the timely response, appreciate it

Laurenleakan

  • Member
  • Posts: 309
Reply 3 on: Yesterday
Wow, this really help

« previous next »
 

Did you know?

Since 1988, the CDC has reported a 99% reduction in bacterial meningitis caused by Haemophilus influenzae, due to the introduction of the vaccine against it.

Did you know?

Signs of depression include feeling sad most of the time for 2 weeks or longer; loss of interest in things normally enjoyed; lack of energy; sleep and appetite disturbances; weight changes; feelings of hopelessness, helplessness, or worthlessness; an inability to make decisions; and thoughts of death and suicide.

Did you know?

For pediatric patients, intravenous fluids are the most commonly cited products involved in medication errors that are reported to the USP.

Did you know?

Although the Roman numeral for the number 4 has always been taught to have been "IV," according to historians, the ancient Romans probably used "IIII" most of the time. This is partially backed up by the fact that early grandfather clocks displayed IIII for the number 4 instead of IV. Early clockmakers apparently thought that the IIII balanced out the VIII (used for the number 8) on the clock face and that it just looked better.

Did you know?

Pink eye is a term that refers to conjunctivitis, which is inflammation of the thin, clear membrane (conjunctiva) over the white part of the eye (sclera). It may be triggered by a virus, bacteria, or foreign body in the eye. Antibiotic eye drops alleviate bacterial conjunctivitis, and antihistamine allergy pills or eye drops help control allergic conjunctivitis symptoms.

Laboratory mice demonstrate that genetic differences can have profound effects on the propensity to Laboratory mice demonstrate that genetic differences can have profound effects on the propensity to
This chart illustrates the “drip down” model of government. In this, politics is formed by the soc This chart illustrates the “drip down” model of government. In this, politics is formed by the soc
Age and Grammatical Knowledge The challenge of learning a second language rises with age. Source: J Age and Grammatical Knowledge The challenge of learning a second language rises with age. Source: J
Figure 7.1 shows the rapid decline in the trust of Americans in government since the 1960s. This de Figure 7.1 shows the rapid decline in the trust of Americans in government since the 1960s. This de
American Government: Roots and Reform, 2009 Edition American Government: Roots and Reform, 2009 Edition
Government By the People, 2016 Presidential Election, 26th Edition Government By the People, 2016 Presidential Election, 26th Edition
Video: What are Strong & Weak Acids and How they're different?

For a complete list of videos, visit our video library