Calculate the value of the government purchases multiplier if the marginal propensity to consume equals 0.9, the tax rate equals 0.25, and the marginal propensity to import equals 0.15
What will be an ideal response?
Government purchases multiplier = 1 / 1 - (0.9(1 - 0.25 ) - 0.15 ) = 2.11
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Any rule that is used to make a choice is
A) positive-sum game. B) zero-sum game. C) strategy. D) negative-sum game.
For a horizontal demand curve,
a. the slope is undefined, and the price elasticity of demand is equal to 0. b. the slope is equal to 0, and the price elasticity of demand is undefined. c. both the slope and price elasticity of demand are undefined. d. both the slope and price elasticity of demand are equal to 0.
What happens to the real interest rate?
a. It equalizes at 4 percent due to capital movements between the two countries.
b. It equalizes at 5 percent due to capital movements between the two countries.
c. The two interest rates converge at 5 percent.
d. The two interest rates converge at 3 percent.
Savings and investment are equal:
A. at the equilibrium in the market for loanable funds. B. when banks operate according to banking regulations. C. because banks regulate their flow. D. at an interest rate set by the Fed.