Consider the table below. It provides data in the spending on final goods, in billions of dollars, by consumers, businesses, and the government in equilibrium in a country with no international trade.Aggregate Variables Value (in billions of dollars) in the base year
Consumption spending $900
Investment spending $400
Government spending $200
Transfer payments $60
The marginal propensity to save is equal to 0.4 and there are no exports or imports,
(a) Calculate the real GDP in this country, Show your work
(b) Calculate the marginal propensity to consume Show your work.
(c) Suppose that the government increases spending from $200 billion to $300 billion
(i) Calculate the maximum change in real GDP. Show your work
(ii) Given the change in real GDP in part (c)(i), calculate the maximum level of the new equilibrium real GDP. Show your work
(d) Suppose that taxes decrease by $100 billion. Will the maximum change in real GDP be larger than, smaller than, or equal to the change in part (c)(i)? Explain.

Suppose that the marginal propensity to consume is 0.80 and the government spends $10 million to repair a bridge. Assuming no taxes and no international trade, explain how the $10 million of government spending will increase GDP by $50 million.

A $500 billion increase in investment spending causes the equilibrium income in the country of Oncy to rise by $5,000billion.

What is the marginal propensity to consume in this economy?

A. 0.9

B. 0.6

C. 0.8

D. 0.5

Which of the following correctly describes the composition of the $5,000 billion rises in aggregate demand that occurs in Oncy?

A. Consumption spending increases by $3,000 billion; investment spending increases by $1,000 billion; saving increases by $1,000billion

B. Government spending increases by $3,000 billion; investment spending increases by $500 billion; net exports decrease by $2,000billion; consumption spending increases by $3,500 billion

C. Government spending increases by $2,500 billion; investment spending increases by $500 billion; net exports increase by $2,000billion

D. Consumption spending increases by $4,500 billion; investment spending increases by $500 billion

A $500 billion increase in investment spending causes the equilibrium income in the country of Oncy to rise by $5,000billion.

If Oncy was at full employment before the increase in investment spending, what is the situation in Oncy after the $500 billion increase in investment spending?

A. Full employment

B. An inflationary gap

C. A recessionary gap with cyclical unemployment

The equilibrium level of real GDP is $1 trillion, the target full-employment level of real GDP is, $1.5 trillion, and the marginal propensity to consume is 0.75. The target can reached if the government spending is

a.increased by $100 billion.

b. increased by $125 billion.

c. increased by $500 billion.

d. held constant.