Question 1

Exhibit 10-9
 
-Refer to Exhibit 10-9. What is the value of the marginal propensity to save (MPS) that would correctly fill in blank (E) and the multiplier that would correctly fill in blank (F)?

Accepted Answer

The value of the marginal propensity to save (MPS) can be calculated by looking at the slope of the consumption function. In this exhibit, the consumption function has a slope of -0.15. Since MPS is the fraction of each additional dollar of income that is saved, it is equal to the slope of the consumption function times -1. Therefore, MPS = 0.15.

The multiplier can be calculated using the formula 1/(1-MPC), where MPC is the marginal propensity to consume. Since MPS + MPC = 1, we can calculate MPC as 1 - MPS = 1 - 0.15 = 0.85. Therefore, the multiplier is 1/(1-0.85) = 6.67.

Question 2

Describe Keynes' criticism of Say's law in a money economy.

Accepted Answer

The answer of Describe Keynes' criticism of Say's law in...

Question 3

What is the general format of the consumption function? Explain what each term means and use the consumption function to explain the three different ways that consumption can increase.

Accepted Answer

The answer of What is the general format of the...

Question 4

Economist Brown believes that changes in aggregate demand affect only the price level, and economist Black believes that changes in aggregate demand affect only Real GDP. What does the aggregate supply (AS) curve look like for each economist?

Accepted Answer

Economist Brown's view that changes in aggregate demand affect only the price level implies a vertical AS curve, indicating that output does not change as the price level changes. Economist Black's view that changes in aggregate demand affect only Real GDP implies a horizontal AS curve, indicating that the price level does not change as output changes.

Question 5

Exhibit 10-9
 
-Refer to Exhibit 10-9. What is the value of the marginal propensity to save (MPS) that would correctly fill in blank (A) and the multiplier that would correctly fill in blank (B)?

Accepted Answer

The answer of Exhibit 10-9
 
-Refer to Exhibit 10-9. What...

Question 6

Exhibit 10-8
 
-Refer to Exhibit 10-8. When disposable income equals $3,000, saving equals

Accepted Answer

At a disposable income of $3,000, the consumption function intersects the 45-degree line at point E. Therefore, saving equals $200 ($3,000 - $2,800). So, the correct answer is D.

Question 7

Describe the three basic points that Keynes made regarding consumption. Briefly explain why consumption was such a main concern in the Keynesian model.

Accepted Answer

The answer of Describe the three basic points that Keynes...

Question 8

In the simple Keynesian model, a rightward shift in the aggregate demand curve __________ result in a change in the price level when the economy is in the horizontal segment of the AS curve and ___________ result in a change in the price level if the economy is in the vertical segment of the AS curve.

Accepted Answer

In the simple Keynesian model, when the economy is in the horizontal segment of the AS curve, it is operating below full capacity, and a rightward shift in the aggregate demand curve will increase output without changing the price level. However, if the economy is in the vertical segment of the AS curve, it is at full capacity, and a rightward shift in the aggregate demand curve will not increase output but will result in a higher price level.

Question 9

Explain the process by which an initial change in autonomous spending can lead to an even greater change in total spending.

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Question 10

Exhibit 10-9
 
-Refer to Exhibit 10-9. What is the value of the marginal propensity to consume (MPC) that would correctly fill in blank (C) and the marginal propensity to save (MPS) that would correctly fill in blank (D)?

Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption resulting from a change in disposable income. In this case, the change in consumption is $90 ($900 - $810) and the change in disposable income is $100 ($1200 - $1100). Therefore, MPC = 90/100 = 0.90.

The marginal propensity to save (MPS) is the change in saving resulting from a change in disposable income. In this case, the change in saving is $10 ($110 - $100) and the change in disposable income is $100 ($1200 - $1100). Therefore, MPS = 10/100 = 0.10.

Therefore, the correct answer is A: 0.90; 0.10.

Question 11

Given the following data, what is the distance from the origin to the point where the total expenditures (TE) curve cuts the vertical axis? ​
C = $4,200 + 0.90Yd
I = $1,820
G = $970
​

Accepted Answer

To find the point where the TE curve intersects the vertical axis (i.e. where Yd=0), we need to find the value of C.

C = $4,200 + 0.90(0) + $1,820 + $970
C = $7,990

The distance from the origin to this point is given by the square root of the sum of the squares of C, I, and G:

sqrt($7,990^2 + $1,820^2 + $970^2) = $6,990

Therefore, the correct answer is C.

Question 12

Discuss how the Great Depression contributed to the development of Keynesian economics.

Accepted Answer

The answer of Discuss how the Great Depression contributed to...

Question 13

Explain the sequence of events that occurs in the economy once total production (TP) is less than total expenditure (TE).

Accepted Answer

The answer of Explain the sequence of events that occurs...

Question 14

As portrayed in terms of total expenditures (TE) and total production (TP), discuss at least three assumptions that sum up the workings of the simple Keynesian model.

Accepted Answer

The answer of As portrayed in terms of total expenditures...

Question 15

What type of relationship exists between the marginal propensity to consume (MPC) and the multiplier? Explain why this relationship exists, giving a hypothetical numerical example to help support your answer.

Accepted Answer

The answer of What type of relationship exists between the...

Question 16

Exhibit 10-9
 
-Refer to Exhibit 10-9. What is the value of the marginal propensity to consume (MPC) that would correctly fill in blank (G) and the value of the multiplier that would correctly fill in blank (H)?

Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption divided by the change in income, which is often represented as the slope of the consumption function. The multiplier is calculated as 1/(1-MPC). Given the options, an MPC of 0.80 leads to a multiplier of 5 (1/(1-0.80) = 5), which fits the typical economic models for these concepts.

Question 17

Explain how the Keynesian view differs from the classical view with respect to saving. Explain further how the two views differ with respect to investment.

Accepted Answer

The answer of Explain how the Keynesian view differs from...

Question 18

Using the concept of the multiplier, explain in detail how college students flocking to beach towns for spring break can positively impact the beach towns' economies.

Accepted Answer

The answer of Using the concept of the multiplier, explain...

Question 19

Which of the following is a basic point that Keynes made about consumption?

Accepted Answer

Keynes argued that consumption is primarily determined by the level of disposable income, meaning as disposable income increases, so does consumption, but not necessarily at the same rate or by a greater amount. This is the fundamental relationship described in Keynesian economics between consumption and disposable income.

Question 20

Given the following data, what is the distance from the origin to the point where the total expenditures (TE) curve cuts the vertical axis? ​
C = $700 + 0.75Yd
I = $350
G = $640
​

Accepted Answer

The total expenditures (TE) curve is found by adding up consumption (C), investment (I), and government spending (G). At the point where the TE curve cuts the vertical axis, the disposable income (Yd) is zero. Thus, C at Yd = 0 is $700 (since 0.75Yd is zero when Yd is zero), I is $350, and G is $640. Adding these together, $700 + $350 + $640 = $1,690.

Quiz 10: Keynesian Macroeconomics and Economic Instability a Critique of the Self Regulating Economy

Exhibit 10-9 -Refer to Exhibit 10-9. What is the value of the marginal propensity to save (MPS) that would correctly fill in blank (E) and the multiplier that would correctly fill in blank (F) ?

Describe Keynes' criticism of Say's law in a money economy.

What is the general format of the consumption function? Explain what each term means and use the consumption function to explain the three different ways that consumption can increase.

Economist Brown believes that changes in aggregate demand affect only the price level, and economist Black believes that changes in aggregate demand affect only Real GDP. What does the aggregate supply (AS) curve look like for each economist?

Exhibit 10-9 -Refer to Exhibit 10-9. What is the value of the marginal propensity to save (MPS) that would correctly fill in blank (A) and the multiplier that would correctly fill in blank (B) ?

Exhibit 10-8 -Refer to Exhibit 10-8. When disposable income equals $3,000, saving equals

Describe the three basic points that Keynes made regarding consumption. Briefly explain why consumption was such a main concern in the Keynesian model.

In the simple Keynesian model, a rightward shift in the aggregate demand curve result in a change in the price level when the economy is in the horizontal segment of the AS curve and _ result in a change in the price level if the economy is in the vertical segment of the AS curve.

Explain the process by which an initial change in autonomous spending can lead to an even greater change in total spending.

Exhibit 10-9 -Refer to Exhibit 10-9. What is the value of the marginal propensity to consume (MPC) that would correctly fill in blank (C) and the marginal propensity to save (MPS) that would correctly fill in blank (D) ?

Given the following data, what is the distance from the origin to the point where the total expenditures (TE) curve cuts the vertical axis? C = $4,200 + 0.90Yd I = $1,820 G = $970

Discuss how the Great Depression contributed to the development of Keynesian economics.

Explain the sequence of events that occurs in the economy once total production (TP) is less than total expenditure (TE).

As portrayed in terms of total expenditures (TE) and total production (TP), discuss at least three assumptions that sum up the workings of the simple Keynesian model.

What type of relationship exists between the marginal propensity to consume (MPC) and the multiplier? Explain why this relationship exists, giving a hypothetical numerical example to help support your answer.

Exhibit 10-9 -Refer to Exhibit 10-9. What is the value of the marginal propensity to consume (MPC) that would correctly fill in blank (G) and the value of the multiplier that would correctly fill in blank (H) ?

Explain how the Keynesian view differs from the classical view with respect to saving. Explain further how the two views differ with respect to investment.

Using the concept of the multiplier, explain in detail how college students flocking to beach towns for spring break can positively impact the beach towns' economies.

Which of the following is a basic point that Keynes made about consumption?

Given the following data, what is the distance from the origin to the point where the total expenditures (TE) curve cuts the vertical axis? C = $700 + 0.75Yd I = $350 G = $640

Quiz 10: Keynesian Macroeconomics and Economic Instability a Critique of the Self Regulating Economy

Exhibit 10-9 -Refer to Exhibit 10-9. What is the value of the marginal propensity to save (MPS) that would correctly fill in blank (E) and the multiplier that would correctly fill in blank (F) ?

Describe Keynes' criticism of Say's law in a money economy.

What is the general format of the consumption function? Explain what each term means and use the consumption function to explain the three different ways that consumption can increase.

Economist Brown believes that changes in aggregate demand affect only the price level, and economist Black believes that changes in aggregate demand affect only Real GDP. What does the aggregate supply (AS) curve look like for each economist?

Exhibit 10-9 -Refer to Exhibit 10-9. What is the value of the marginal propensity to save (MPS) that would correctly fill in blank (A) and the multiplier that would correctly fill in blank (B) ?

Exhibit 10-8 -Refer to Exhibit 10-8. When disposable income equals $3,000, saving equals

Describe the three basic points that Keynes made regarding consumption. Briefly explain why consumption was such a main concern in the Keynesian model.

Explain the process by which an initial change in autonomous spending can lead to an even greater change in total spending.

Exhibit 10-9 -Refer to Exhibit 10-9. What is the value of the marginal propensity to consume (MPC) that would correctly fill in blank (C) and the marginal propensity to save (MPS) that would correctly fill in blank (D) ?

Given the following data, what is the distance from the origin to the point where the total expenditures (TE) curve cuts the vertical axis? ​ C = $4,200 + 0.90Yd I = $1,820 G = $970 ​

Discuss how the Great Depression contributed to the development of Keynesian economics.

Explain the sequence of events that occurs in the economy once total production (TP) is less than total expenditure (TE).

As portrayed in terms of total expenditures (TE) and total production (TP), discuss at least three assumptions that sum up the workings of the simple Keynesian model.

What type of relationship exists between the marginal propensity to consume (MPC) and the multiplier? Explain why this relationship exists, giving a hypothetical numerical example to help support your answer.

Exhibit 10-9 -Refer to Exhibit 10-9. What is the value of the marginal propensity to consume (MPC) that would correctly fill in blank (G) and the value of the multiplier that would correctly fill in blank (H) ?

Explain how the Keynesian view differs from the classical view with respect to saving. Explain further how the two views differ with respect to investment.

Using the concept of the multiplier, explain in detail how college students flocking to beach towns for spring break can positively impact the beach towns' economies.

Which of the following is a basic point that Keynes made about consumption?

Given the following data, what is the distance from the origin to the point where the total expenditures (TE) curve cuts the vertical axis? ​ C = $700 + 0.75Yd I = $350 G = $640 ​

Given the following data, what is the distance from the origin to the point where the total expenditures (TE) curve cuts the vertical axis? C = $4,200 + 0.90Yd I = $1,820 G = $970

Given the following data, what is the distance from the origin to the point where the total expenditures (TE) curve cuts the vertical axis? C = $700 + 0.75Yd I = $350 G = $640