--%>

Determine sizes of the MPC- the MPS and the multiplier

Refer to the table below in answering the questions which follow:

725_inflationary expenditure gap or recessionary expenditure gap.png

Suppose that investment, net exports and government expenditures do not modify with changes in real GDP, determine the sizes of the MPC, the MPS, and the multiplier?

 

 

E

Expert

Verified

MPC = .8 (= $40 billion/$50 billion); MPS = .2 (= 1 -.8); multiplier = 5 (= 1/.2).

   Related Questions in Finance Basics

  • Q : Size of the labour force net population

    Normal 0 false false

  • Q : Growth rate of its real GDP Normal 0

    Normal 0 false false

  • Q : Measuring net output GDP in a specific

    Why do national income accountants comprise only final goods in measuring net output GDP in a specific year? Why don't they comprise the value of stocks and bonds bought & sold? Why don't they comprise the value of utilized furniture bought and so

  • Q : Describe the role of cash and of

    Describe the role of cash and of earnings while a corporation is deciding how much, if any, cash dividends to pay to common stockholders. In the long-run earnings are essential to maintain dividend payments; however at the time an actual dividen

  • Q : Why riskiness of portfolios is

    Normal 0 false false

  • Q : Reducing payroll costs It is likely

    It is likely that in the next few years, employers will face incresing pressures to reduce their payroll costs. critically evaluate the range of ways by which payroll costs can be reduced whilst taking into account the need to maintain a focus on the

  • Q : Define the term Chapter Chapter : The

    Chapter: The reference allotted by the Secretary of State to an enacted bill, numbered in sequence in order of enactment each calendar year. The enacted bill is then termed to by this "chapter" number and the year in which it became law. For illustrat

  • Q : Which insurance company takes on the

    Which kind of insurance company usually takes on the greater risks: a life insurance company or a property and casualty insurance company? The risks sheltered against by property and casualty companies are much less predictable than are the risk

  • Q : Define Employee Compensation or

    Employee Compensation or Retirement: Salary, advantage, employer retirement rate contribution adjustments, and any other associated statewide compensation adjustments for the state employees. Different 9800 Items of the Budget Act suitable funds for c

  • Q : Government requirements imposed on

    Describe some of the government requirements imposed onto a public corporation which are not imposed on a private, intimately held corporation? Public corporations ought to submit audited financial statements to the government for release to the