Ask Question
BusinessBusiness
8 November, 05:59

The Bureau of Economic Analysis reported that, in real terms, overall consumer spending increased by $35.4 billion during October 2010.

a. If the marginal propensity to consume is 0.52, by how much will real GDP change in response?

b. If there are no other changes to autonomous spending other than the increase in consumer spending in part a, and unplanned inventory investment, decreased by $50 billion, what is the change in real GDP?

c. GDP at the end of September 2010 was $13,139.5 billion. If GDP were to increase by the amount calculated in part b, what would be the percent increase in GDP?

+4
Answers (2)
  1. 8 November, 08:23
    0
    a. Now we have a conditional tendency to consume, 1/MPS = 1/1-MPC = 1/1-0.52 = 2.083 can be determined using this multiplier.

    Now therefore, the total increase is 35.4 * 2.083 = approximately 73.7 Billion.

    b. Here we can see two opposite forces GDP one reduces it and overall impact is + 35.4-50 = - 14.6

    Keeping that factor in mind, we see that the overall decrease is Approximately 30.4118 Billion.

    c. Raise Ratio is 30.4118 / 13.139.5 = 0.231 per cent
  2. 8 November, 09:11
    0
    A.$73.75 billions

    B. $50 billion

    C. 0.18%

    Explanation:

    a. The real GDP change in response by

    (1 / (1 - MPC) * $35.4 billion = (1 / (1 - 0.52) * $35.4 billion = $73.75 billion.

    b. If in addition to the consumer spending change in part a, unplanned inventory invest-ment decreases by $50 billion, the resulting change in real GDP is

    $73.75 billion - $50 billion = $23.75 billion.

    c. The percent increase in GDP is

    ($23.75 billion/$13,139.5 billion) * 100

    =0.18%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The Bureau of Economic Analysis reported that, in real terms, overall consumer spending increased by $35.4 billion during October 2010. a. ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
During its most recent fiscal year, Raphael Enterprises sold 340,000 electric screwdrivers at a price of $19.20 each. Fixed costs amounted to $1,156,000 and pretax income was $1,496,000.
Answers (1)
The Target Corporation purchased a larger freezer to hold its frozen foods and frozen desserts that it sells on a regular basis. The cost of the equipment was $50,000 and is expected to be useful for only 10 years.
Answers (1)
Select all that apply. A primary incentive for entrepreneurs is 1: Profit 2: A skill and happy workforce 3: Notoriety 4: Seeing an idea come into being 5: Paying taxes
Answers (1)
A standard which represents an efficient level of performance that is attainable under expected operating conditions is called a (n) a. ideal standard. b. loose standard. c. tight standard. d. normal standard.
Answers (1)
If the contribution margin is not sufficient to cover fixed expenses:Multiple Choicevariable expenses equal contribution margin. contribution margin is negative. a loss occurs. total profit equals total expenses.
Answers (1)
New Questions in Business
Interest groups ___. Are most often set up by or work for elites and corporations Work to influence laws and policies Work to influence court rulings All of these answers
Answers (1)
What if the tile work had proceeded as contracted and looked good, but STR refused to pay, saying it didn't meet their personal satisfaction (even though the contract didn't mention this option). Could STR refuse to pay?
Answers (1)
You want to create a slide that lists the pros and cons of using cloud storage as part of your presentation on business technology. Which pre-set layout would you want to use? A. Content with caption B. Title only C.
Answers (2)
Two or more products are produced using limited resources. The firm would like to determine how many units of each product it should produce to maximize overall profit given its limited resources.
Answers (1)
1. Calculate owners' equity. Doughnut Company shows $130,000 worth of assets on its December 31, 2009, balance sheet. If total liabilities are $55,800, what is the amount of owners' equity?
Answers (1)
Home » Business » The Bureau of Economic Analysis reported that, in real terms, overall consumer spending increased by $35.4 billion during October 2010. a. If the marginal propensity to consume is 0.52, by how much will real GDP change in response? b.
Sign Up Forgot Password?