Register
In a neoclassical economy, assume that the government lowers both government spending and taxes by $100 billion. If the marginal propensity to consume is 0.6, investment will: Group of answer choices rise
452,600 views
13 votes
13 votes
In a neoclassical economy, assume that the government lowers both government spending and taxes by $100 billion. If the marginal propensity to consume is 0.6, investment will: Group of answer choices rise by $100 billion. not change. rise by $40 billion. rise by $60 billion.

User Yzorg
by
2.5k points

1 Answer

17 votes
17 votes

Answer:

rise by $40 billion

Step-by-step explanation:

Calculation to determine what the investment will be

Investment=$100 billion*(100%-60%)

=$100 billion*40%

=$40 billion

Therefore the investment will rise by $40 billion

User That Other Guy
by
3.0k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

1.6m questions

2.0m answers

Other Questions

If the rate of inflation in Japan dramatically increases while the rate of inflation in the United States remains constant, then a. the demand curve for dollars shifts to the left. b. the demand curve
If you buy a one-year bond for $4,000 and the issuer pays you back $5,000 at the end of one year, the interest rate on the bond is
Kylie is risk averse and has $1,000 with which to make a financial investment. She has three options. Option A is a risk-free government bond that pays 5 percent interest each year for two years. Option
From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that Group of answer choices bond interest is deductible for tax purposes. interest must be
Elroy Rocket is entering his senior year as an accounting major and has a number of options for his summer break. His options for the 3 month break follow: (1) Work full time at a local accounting firm
Link Copied!