On the attached document, I would like the step by step process to the answers for questions 1,2,5,9 each question has a, b, c etc that I need solutions for, Thank you for your assistance. Document...

On the attached document, I would like the step by step process to the answers for questions 1,2,5,9 each question has a, b, c etc that I need solutions for, Thank you for your assistance.

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..,.•..-------. Westlandia _~e to an increase in consumer wealth, there is a $40 billion Incremental Total 21i:onomousincrease in consumer spending in the economies change change ;:; Westlandia and Eastlandia. Assuming that the aggregate Rounds in GDP in GDP ;:ice levelis constant, the interest rate is fixedin both coun- 1_ .•..-..~~~ __ ~_" •~"' . ...,.._.. 1 M= $40 billion :25, and there are no taxes and no foreign trade, complete ? 2 '~e accompanying tables to show the various rounds of ? MPCxM== ? :::creased spending that will occur in both economies if the 3 MP[ x MP[ x M == ? ? =carginal propensity to consume is 0.5 in Westlandia and 4 ;> MP[xMP[xMP[xM= ? _.75 in Eastlandia. What do your results indicate about the :-=iationshipbetween the size of the marginal propensity to Total ;:::'nsumeand the multiplier? change (1/(1 - MPC» X tlC = ? in GDP ~1LL~\( f-\\ ~ ~,-,,'b,L- fjG..'-0 Eastlanma Disposableincome Consumer5p~en••io Incremental Total Year (millions of d~Uars) (millions of dol change change 2003 $100 in GDP in GUP Rounds $180 _.._------- 2004 350 380 M == $40 billion ? 2005 300 ;> 340 MP[xM== ? - . 2006 400 420 MP[x MP[x M= ? ? - --- ..- - .- 2007 375 ;> 400 MP[ x MPCx MP[ x M == ? 2008 500 500 Total a.Plot the aggregate consumption function for Eastlandi change b.What isthe marginal propensity to consume? What is.±I . t in GDP (1/(1 - MPC» x tlC = ? marginal propensity to save? 2. Assuming that the aggregate price levelis constant, the inter- c.What isthe aggregate consumption function? est rate is fixed, and there are no taxes and no foreign trade, ------- 5. The Bureau of Economic Analysis reported that overall ~ what willbethe change in GDP ifthe following events occur? sumer spending decreased by $102,8 billion during October _ a.There is an autonomous increase in consumer spending of 2008, $25 billion; the marginal propensity to consume is 2/3. a. Ifthe marginal propensity to consume is 0.56, by how b.Firms reduce investinent spending by $40...

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Answered Same DayDec 20, 2021

Answer To: On the attached document, I would like the step by step process to the answers for questions 1,2,5,9...

David answered on Dec 20 2021

109 Votes

Q1
    WESTLANDIS


    ROUND
     INCREMENTAL CHANGE IN gdp
    TOTAL CHANGE IN GDP
    1
    40
    40
    2
    40*.5=20
    20
    3
    20*.5=10
    10
    4
    10*.5=5
    5
    5
    5*.5=2.5
    2.5
    TOTAL
    80
    40*(1/(1-.5))=80
    EASTLANDIS


    ROUND
     INCREMENTAL CHANGE IN gdp
    TOTAL CHANGE IN GDP
    1
    40
    40
    2
    40*.75=30
    30
    3
    20*.75=15
    15
    4
    10*.75=7.5
    7.5
    5
    5*.75=3.75
    3.75
    TOTAL
    160
    40*(1/(1-.75))=160
This tells us that smaller is the MPC smaller is the multiplier.
When MPC= .5 multiplier= 1/(1-.5) = 2 , so total change in GDp = 40*2=80
When MPC= .75 multiplier= 1/(1-.75) = 4 , so total change in GDp = 40*4=160
Q2
A.
As consumption has risen the GDP will also rise by a higher amount. This amount is given by the spending/consumption multiplier= m= 1/(1-MPC) = 1/(1-2/3)= 3
m= change in GDP/ change in C
change in C= +25 billion
so change in GDp = 25*3 = a RISE of 75...

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On the attached document, I would like the step by step process to the answers for questions 1,2,5,9 each question has a, b, c etc that I need solutions for, Thank you for your assistance. Document...

Answer To: On the attached document, I would like the step by step process to the answers for questions 1,2,5,9...

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