Answer to Question #60382 in Macroeconomics for Alex

Question #60382
Suppose equilibrium savings equals $750 billion, and equilibrium GDP equals $3,500 billion. Investment spending rises to $900 billion, and equilibrium level of real GDP increases by $500 billion. Assuming everything else remains constant, the value of the spending multiplier is: A. 2.5 B. 1.8 C. 4.4 D. 4.0 E. 3.3 Suppose the current rate of inflation is about 14% and there is an inflationary gap of $150 billion in the economy. Which of the following policies would be most appropriate to reduce inflation if the marginal propensity to save is equal to 0.05 A. Reduce government spending by $30 billion B. Reduce government spending by $25 billion C. Reduce G by $7.5 billion D. Reduce G by $150 billion E. Reduce G by $50 billion
1
Expert's answer
2016-06-17T09:55:02-0400
Answer: E. 3.3.

Answer: C. Reduce G by $7.5 billion.

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be first!

Leave a comment

Ask Your question

LATEST TUTORIALS
New on Blog
APPROVED BY CLIENTS
paypal