Homework 3 chapters 18 20 23 27 updated .docx - MBA601B Survey of Economics Prof Mamo Homework#3 23 27 Instructions This is a group assignment Read the

Homework 3 chapters 18 20 23 27 updated .docx - MBA601B...

This preview shows page 1 - 3 out of 7 pages.

MBA601B Survey of Economics Prof. Mamo Homework #3: chapters 18, 20, 23, 27 Instructions: This is a group assignment Read the relevant sections in the text Prepare your answers on a separate word document (you may use this file to type in your answers and submit) Upload your answers to canvas Group ______6 _____ Names: Priya Soni, Diana Mavlanvona, and Connor Gibbs Chapter 18 Equilibrium in the economy 1. State one factor that might affect the level of each category of injections (I, G, X) in an economy. > The level of Investment: It influenced by the cost of borrowing (interest rates) and expectations of future profits, rather than the level of income at the moment. Cheaper borrowing is likely to encourage more investment 2. If an increase in injections of £20 billion increases national income by £80 billion what is the size of the multiplier? What does this mean the size of the marginal propensity to consume domestically is? 3. Savings $20 billion, Exports $40 billion, Taxation revenue $45 billion, Government spending $20bn, Investment $15 billion. Given that the economy is in equilibrium, what is the value of import spending? 4. On the following diagram, the MPC is 0.75 and Y1 = 1,000 on the left panel and the MPC = 0.9 and Y1 = 1,000 on the panel in the right. In each panel, the change in AD is 20. Calculate the value of Y2 for each panel. Explain the role of the MPC in the multiplier process. > As marginal propensity consumes increases from 0.75 to 0.90 the multiplier increases. The more people are willing to spend the more is multiplier. > The lower the MPC, lower the multiplier. © Andrew Gillespie, 2016. All rights reserved.
Image of page 1
5. Explain what is meant by a deflationary gap, and an inflationary gap.
Image of page 2
Image of page 3

You've reached the end of your free preview.

Want to read all 7 pages?

  • Fall '19

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors