Assume the Economy Is in Short-Run Equilibrium and There Is

question 68

Essay

Assume the economy is in short-run equilibrium and there is less than full-employment output.Also assume that the marginal propensity to consume (MPC)is equal to 0.8.
a.What is the value of the government spending multiplier in this case?
b.Given the size of the multiplier,what would be the implied change in income (gross domestic product)from the stimulus spending of $500 billion?

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Definitions:

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A structured pay scale that categorizes positions based on responsibility levels, skill requirements, and job complexity to determine salary ranges.

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Research studies that collect and analyze data on the compensation paid to employees in various positions and industries.

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Positions that are critical for the operation and success of a business due to their unique responsibilities or specialized skill requirements.

Pay Grade

A level or step within a compensation system that determines the pay range for employees based on their job role, skills, or experience.