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Understanding Consumption and Income Multipliers in Bartlettland: Key Economic Concepts

This document delves into the macroeconomic principles of Bartlettland, focusing on income and consumption values. It outlines calculations for the government spending multiplier, effects of tax increases on GDP, and changes in investment and government spending. The text discusses marginal propensity to consume and its implications on equilibrium GDP in the Keynesian Aggregate Expenditure model. Through detailed examples, it illustrates the relationship between fiscal policy movements and their economic impact, making it a valuable resource for economics students and educators alike.

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Understanding Consumption and Income Multipliers in Bartlettland: Key Economic Concepts

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  1. Mr. Weiss Macro Unit 3 Math Work Bartlettland has the following values for income and consumption. Use this data to answer the following questions: 1. The government spending multiplier in Bartlettland is:

  2. Mr. Weiss Macro Unit 3 Math Work Bartlettland has the following values for income and consumption. Use this data to answer the following questions: 1. The government spending multiplier in Bartlettland is: MPC = 100/200 = .5 MPS = 100/200 = .5 1/(1-.5) = 1/.5 = 2 1/.5 = 2

  3. Mr. Weiss Macro Unit 3 Math Work Bartlettland has the following values for income and consumption. Use this data to answer the following questions: 2. If there is an increase in taxes of $700 in Bartlettland the decrease in GDP will be:

  4. Mr. Weiss Macro Unit 3 Math Work Bartlettland has the following values for income and consumption. Use this data to answer the following questions: 2. If there is an increase in taxes of $700 in Bartlettland the decrease in GDP will be: -.5/(1-.5) = -.5/.5 = -1 700 x -1 = -$700

  5. Mr. Weiss Macro Unit 3 Math Work Bartlettland has the following values for income and consumption. Use this data to answer the following questions: 3. If there is an increase in investment spending of $300 and an increase in taxes of $200, the change in the GDP will be:

  6. Mr. Weiss Macro Unit 3 Math Work Bartlettland has the following values for income and consumption. Use this data to answer the following questions: 3. If there is an increase in investment spending of $300 and an increase in taxes of $200, the change in the GDP will be: 300 x 2 = 600 200 x -1 = -200 400

  7. Mr. Weiss Macro Unit 3 Math Work Bartlettland has the following values for income and consumption. Use this data to answer the following questions: 4. If there is an increase in government spending of $1000, the increase in GDP will be:

  8. Mr. Weiss Macro Unit 3 Math Work Bartlettland has the following values for income and consumption. Use this data to answer the following questions: 4. If there is an increase in government spending of $1000, the increase in GDP will be: $1000 x 2 - $2000

  9. Mr. Weiss Macro Unit 3 Math Work 5. If Bartlett Hawk’s income goes up from $ 700 to $ 850, and his/her level of consumption expenditures goes up from $ 550 to $ 650, you may conclude that her/his marginal propensity to consume is:

  10. Mr. Weiss Macro Unit 3 Math Work 5. If Bartlett Hawk’s income goes up from $ 700 to $ 850, and his/her level of consumption expenditures goes up from $ 550 to $ 650, you may conclude that her/his marginal propensity to consume is: MPC = 100/150 = .67 MPS = 50/150 = .33

  11. Mr. Weiss Macro Unit 3 Math Work 6. In the Keynesian Aggregate Expenditure model, if the MPC is .9 and gross investment increases by $ 9 billion, equilibrium GDP will increase by:

  12. Mr. Weiss Macro Unit 3 Math Work 6. In the Keynesian Aggregate Expenditure model, if the MPC is .9 and gross investment increases by $ 9 billion, equilibrium GDP will increase by: MPCMPS 1/(1-.9) = 1/.1 = 10 1/.1) = 10 9 billion x 10 = 90 billion

  13. Mr. Weiss Macro Unit 3 Math Work 7. In the Keynesian Aggregate Expenditure model, if the MPC is .80 and taxes are reduced by $ 25 billion, equilibrium GDP will increase by:

  14. Mr. Weiss Macro Unit 3 Math Work 7. In the Keynesian Aggregate Expenditure model, if the MPC is .80 and taxes are reduced by $ 25 billion, equilibrium GDP will increase by: MPCMPS -.80/(1-.80) - .80/.20 = - 4 (4) -.80/.20 = - 4 (4) 4 x 25 billion = $100 billion

  15. Mr. Weiss Macro Unit 3 Math Work 8. In the Keynesian Aggregate Expenditure model, if the MPS is .10 and the government increases spending by $ 500 billion, equilibrium GDP will increase by:

  16. Mr. Weiss Macro Unit 3 Math Work 8. In the Keynesian Aggregate Expenditure model, if the MPS is .10 and the government increases spending by $ 500 billion, equilibrium GDP will increase by: MPC MPS 1/(1-.9) 1/.1 = 10 1/.1 = 10 $ 500 billion x 10 = $ 5 trillion

  17. Mr. Weiss Macro Unit 3 Math Work 9. Using the data in this table, what is the APC and APS at $ 7,000?

  18. Mr. Weiss Macro Unit 3 Math Work 9. Using the data in this table, what is the APC and APS at $ 7,000? APC = 6300/7000 = .90 APS = 700/7000 = .10

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