If the marginal propensity to consume equals 0.75, what change in government spending financed by borrowing from the private sector could eliminate the gap identified in part (a)

Md Ariful Islam

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A change in government spending that can eliminate the gap identified should be equal to the taxation offered to private sector

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Suppose the marginal propensity to consume (MPS) equals 0.20, an increase in autonomous investment of $100 will lead to an increase in real Gross Domestic Product (GDP) by:

Multiplier effect is an effect in economics, in which an increase in spending produces an increase in national income and consumption greater than the initial amount spent. If MPS =...

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Suppose that for a two sector model, the marginal propensity to consume (mpc) is 90%. What is the induced consumption expenditure equal to ?

induced consumption expenditure = 0.9*Income

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If the discretionary income in a nation rises from $13 trillion to $15 trillion and consumption spending increases from $12 trillion to 13.5 trillion what is the marginal propensity to consume?

marginal propensity to consume = (consumption spending2 - consumption spending1)/( income2 – income1) = ($13.5 - $12) / ($15-$13) = 0.75

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If marginal propensity to save is 3/4, then the marginal propensity to consume is

MPC or Marginal propensity to consume is also given as, (1-MPS).  Where, MPS is marginal propensity to save.So, if MPS =3/4Then MPC = (1-3/4)                 = 1/4 or 0.25

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If marginal propensity to save is 0.6 and the government decreases its spending by R50 billion, then south africa ' s real GDP or total income will

MPC=1-MPS=1-0.6=0.4m=1/MPC=1/0.4=2.5Total income will decreases:m*R2.5*50=125 billion

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The increased government spending noted in Q.3.1. above has to be financed in one way or another. Describe three ways in which government spending can be financed.

Government spending can be financed by taxation, borrowing, and by printing money. Taxation - tax revenue is the largest source of government revenue. The government levies income tax, corporate tax,...

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how does private sector borrowing lead to the crowding out effect.

Private sector borrowing will increase interest rates, so the private investment will decrease as a result of decrease in rate of return on investment, so this situation can lead to...

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if the marginal propensity to save is 3/4,then the marginal propensity to consume is (1) 1 (2) 4 (3) 1/5 (4) 1/4

(4) 1/4

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One of the following best explains consumption spending Select one: a. Spending on infrastructure b. None of the option are correct c. Spending on capital goods d. Spending on final consumer goods

\d. Spending on final consumer goods

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Colonialism programmed African countries to: A.Produce and import what they consume B.Consume what the produce and to produce what they consume C.Import and refine goods D. Consume and consume

The answer is A.

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