StudentShare
Search

# Autonomous Spending Multipliers - Assignment Example

Summary
The author of this assignment "Autonomous Spending Multipliers" comments on the economic issues. According to the text, the equilibrium value of real income in this economy can be calculated by adding investments, government spending, net exports and consumptions, excluding or subtracting imports. …

## Extract of sample "Autonomous Spending Multipliers"

Download file to see previous pages The autonomous spending multiplier can be estimated as 6.99, [i.e. 1/(1-0. 0.8571) = 1/0.1429 = 6.99] with the marginal propensity to consume valued as 0.8571 (Economical, “Autonomous Spending Multipliers”). Based on the provided information, the total government expenditures amounted to 2000 and the equilibrium value of real income in this economy has been calculated to be 6900. Thus, the amount of an increase in government spending that would lead to a 1000 increase in real income would be (6900+1000-2000) = 5900. d. The tax rate which needs to change so as to generate a 1000 increase in real income would be [(0.30/6900)*1000] = 0.04 (approximately). In this regard, the simple household income tax rate is 0.30, equilibrium value of real income is 6900 and the increase in real income is expected to be 1000. As household real income and tax rates are identified to be inversely correlated, to generate an additional real income of 1000, the tax rate will be required to be reduced by 0.04, i.e. to 0.26.
Let’s assume that in the late 1970s, the U.S. economy was operating at the potential output with a natural rate of unemployment of 4 percent. In June 1979, OPEC was able to triple the price of crude oil. This led to a (leftward/rightward) ___leftward_____shift of the ___demand____curve. As a result, the aggregate price level (increased/decreased) ___increased____indicating a (fall/rise) ____rise___ in inflation. Additionally, actual output (rose above/fell below) ____fell below___potential output causing unemployment to (fall/rise) ______rise__. This combination of inflation and output is referred to as ______stagflation___. The newly appointed Chair of the Federal Reserve, Paul Volker, responded by decreasing the money supply, resulting in (decrease/increase) __increase_______in interest rates. This led to a (leftward/rightward) ____leftward__ shift of the _____supply_______ curve. As a result, the aggregate price level (increased/decreased) _____increased_____indicating a (fall/rise) ___rise__in inflation and (increase/decrease) _____decrease___in unemployment. In addition, Ronald Regan became president in 1981. His administration cut the tax rate and increased government spending, resulting in new levels of government deficits. This led to a (leftward/rightward) ___rightward___shift of the ___demand___ curve. As a result, the aggregate price level (increased/decreased) __increased____ indicating a (fall/rise) ___rise____ in inflation and unemployment to (fell/rose) ______fell___.
The concepts of ‘off-shoring’ or ‘offshore outsourcing’ is fundamentally related to the shifting of production to any overseas subsidiary by a multinational firm. Moreover, it can also be described as conducting trade in the form of goods and/or services in different foreign nations. With regard to an offshoring model, it can be affirmed that the higher relative wage of skilled labors in the foreign country would eventually result in a higher degree of skilled-labor intensiveness in the home country. Similarly, it is to be affirmed that the lower relative wage of high skilled labors in the home country would make skilled-labor intensive related actions less expensive in comparison with the foreign country. Thus, it can be stated that the home country labor market would desire to undertake its different production activities at the lower margin of the value chain for a given product. ...Download file to see next pagesRead More
Cite this document
• APA
• MLA
• CHICAGO
(Autonomous Spending Multipliers Assignment Example | Topics and Well Written Essays - 2500 words, n.d.)
Autonomous Spending Multipliers Assignment Example | Topics and Well Written Essays - 2500 words. Retrieved from https://studentshare.org/macro-microeconomics/1481785-econ-assignment
(Autonomous Spending Multipliers Assignment Example | Topics and Well Written Essays - 2500 Words)
Autonomous Spending Multipliers Assignment Example | Topics and Well Written Essays - 2500 Words. https://studentshare.org/macro-microeconomics/1481785-econ-assignment.
“Autonomous Spending Multipliers Assignment Example | Topics and Well Written Essays - 2500 Words”, n.d. https://studentshare.org/macro-microeconomics/1481785-econ-assignment.
Click to create a comment or rate a document

## CHECK THESE SAMPLES OF Autonomous Spending Multipliers

### How autonomous are we

...?How Autonomous Are We? Table of Contents Introduction 3 Thesis ment 3 Implication of Milgram’s and Zimbardo’s Work on Employee Morale 4 Discussion on Milgram’s Work 4 Discussion on Zimbardo’s Work 5 What It Means To Be A Moral Employee? 6 Conclusion 7 Works Cited 8 Introduction The experiment piloted by Milgram and Zimbardo is recognized as one of the most popular researches in the field of psychology. The experiment of Stanley Milgram occurred during the period of 1960 and 1963 at Yale University. He desired to study about the preparedness of people to follow commands from higher authority in order to perform activities which can be disagreed to one’s personal morality (Nicholson, “Shocking Masculinity: Stanley Milgram, “Obedience...
4 Pages(1000 words)Essay

### AUTONOMOUS GROUND VEHICLE CONTROL

...Artificial Intelligence An Overview Introduction Artificial Intelligence is called as such because it is used to support systems and processes whenhuman intelligence is absent. Of the manifold applications of artificial intelligence, a very useful one is in the field of aerospace and advanced vehicles. It can also be effectively used in manufacturing, underwater and ground explorations and studying the atmosphere. An artificial control device not only reduces damage or risks, but also tries to handle unforseen mishaps in the system. Literature Review Antsaklis et.al[1988] have described architecture and fundamental issues in autonomous control system in various situations. The word "autonomous" means the power of self governance. Thus...
4 Pages(1000 words)Essay

### Consumer Spending: How it helps the Economy

...Consumer’s spending. How Consumer’s spending helps the Economy. The case of the United s TABLE OF CONTENT 0 Introduction 1 Problem ment1.2 Limitation and Importance of work 1.3 Structure and Design of work 2.0Review of Available Literature 2.1Conclusion Recommendation and the Way Forward 1.0 Introduction Transaction costs economics and the new institutional economics have provided ways in which traditional economics model (On the assumptions of maximising behaviour by individuals) can be used in understanding the relationship between institutions and the reform process ( Craciunesco 2006). Changes in investment activity, employment, and prices may be a recurring and frequent manifestation of economic development in a competitive...
12 Pages(3000 words)Essay

### Public Spending

...Public Spending Table of Contents (A) Drivers that Caused the UK Public Expenditure to Increase 3 (B) Reducing Government Spending 7 References 10 The economic condition throughout the world underwent many changes during the past few decades. There have been a lot of changes in the UK economy too. The changes were made to boost the development of the economic condition of the country. There were several public investment activities that enhanced the service level and along with it there was public finance deficit (Economics Help, 2009). (A) Drivers that Caused the UK Public Expenditure to Increase The public expenditure of the UK economy has increased from the year 1900 to the end of 20th century. There has been increase in the Gross...
5 Pages(1250 words)Essay

### Spending Time

...HOLIDAYS Most love to have holidays. In an age when must work harder than ever before on their studies, holidays mean more time todo things unrelated to studies. Students have more time to have fun and to be young people. Holidays break up busy schedules and provide a great opportunity to spend time with friends and family Spring break is an excellent example of this. Usually it involves a week off school. The weather is often very nice and it is a great opportunity to get outdoors and go hiking or play sports. Both of these activities can be very relaxing, which is what students need after stressful studies. More than that, however, spring break also signals that winter is at an end and summer is just around the corner. Halloween...
1 Pages(250 words)Essay

### Autonomous Vehicles and Software Architectures

...Autonomous Vehicles and Software Architecture al Affiliation: Autonomous Vehicles There are a number of challenges associated withintegrating applications in autonomous vehicles. To start with, the greatest challenge is who or what to blame in case an accident occurs. Is it the driver of that care, the software failure or the software manufacturer? This is a challenge since any of the three might be the cause of the accident and assessing the situation would take lots of time. Secondly, there is no system which lack faults. For instance, when a computer application fails when a vehicle is in motion, say in a highway, it is extremely dangerous since the probable result of the system failure is an accident. Thus, this is a challenge since...
1 Pages(250 words)Essay

### Deficit Spending

...1. Assignment Essay, Macro & Micro economics Deficit Spending Introduction Within the realms ofmacroeconomics, deficit financing is one of the turnkey variables that help in balancing the monetary flow in any modern economy neutralizing generated deficiencies. It is basically a mechanism that remains in the hands of the government of economies for curbing budgetary deficit mainly through borrowing or printing new currency. The concept of deficit financing is well adhered to mainstream Keynesian economics. This in turn stimulates the aggregate demand increasing the aggregate output and hence enhancing employment within the economy (Aryeetey, Harrigan & Nissanke, 2000, p.100). Deficit financing has many advantages that benefit the economy...
2 Pages(500 words)Essay

### The Best Form of Public Spending

...﻿The Best Form of Public Spending The world has various challenges calling for sober decisions to handle and solve them efficiently. From insecurity, poverty, environmental degradation, dwindling quantity of resources, increased population, unemployment and soaring economic levels constitute but just a sample of the challenges man faces on earth (Coate, Knight & National Bureau of Economic Research, 2009). Since they are numerous, there is a need to solve every of them in terms of priority. Consequently, solving one or two of the problems will assist in solving or reducing the effects of other problems. Nevertheless, there is a need for various governments to choose the appropriate and best way to spend resources. Since high poverty...
1 Pages(250 words)Essay

### Governments and spending money on the arts

...With the recent downturn in the economy, the overall amount of money that governments have to spend on societal needs as severely been constrained. For instance, socialist programs relating to welfare, child health, healthcare, and a variety of other needs are already competing with a variety of other governmental requirements; at least in terms of maintaining defense, erecting and maintaining a balance of trade, and a variety of other needs. As such, it is the understanding of this particular student that governments should immediately cease and desist from spending money as a means of supporting the arts (inclusive of music, painting, sculpture, and a variety of other practices that fall under the nomenclature of “the arts”). Although...
1 Pages(250 words)Assignment

### CALCULUS 3 (LAGRANGE MULTIPLIERS)

... Langrage Multipliers Finding the minima or maxima of a function is a common problem in calculus. face the problem of finding a closed form of the objective function (Courant, 36). This paper discusses how the method of langrage multipliers can help solve these problems without explicitly solving the conditions and using them to remove extra variables. Langrage multipliers are helpful when some of the variables in a restraint are redundant (Stewart, 65). For instance, it is not enough to ask, “How can one minimize the gold needed to make a cup?” instead, one should ask, “How can one minimize the gold while making sure the cup will hold half a liter of tea.” Application of Langrage multipliers It is possible to find the minima or maxima...
2 Pages(500 words)Essay

### Spending Figures

...Spending Figures US and Japan Healthcare spending figures Globally, the United s spends far more in terms of its health care than any other nation. According to the New York Times, the United States tends to spend more money on health care as compared to the other twelve industrialized nations thus Netherlands, Germany, France, Japan, Denmark, Canada among others (Wise & Yashiro, 2006). In 2009 alone, the United States spent a total of \$8,000 per person on health care services as compared to Japan, which spent one-third of it on its health care. Unlike the United States, Japan tends to offer an interesting model in terms of its health care. In as much as the health care system almost shares several attributes with the United States, Japan...

### Healthcare Spending

...Health Care System and System Theory Application Affiliation Health Care System and System Theory Application Question One: Application of System Theory in Achieving Desired Outcomes The responsibility of managing health care coupled with increased health care demand has been largely informed by developing a clear theoretical platform that seeks to achieve desired goals. Accessibility of health care as well as its affordability and quality are the areas now the most complex interrelationship in health care system. Balancing quality, affordability and having an appropriate health care system are now the hardest issues to achieve and substantially make the health care dynamics. The need for organized national and global healthcare...
6 Pages(1500 words)Essay

### Government Spending

... Government Spending Question One The Troubled Asset Relief Program (TARP), Bailouts and Quantitative Easing (QE) were used by the US government to revive the economy following the financial crisis. However, the exact figure used through TARP, Bailouts and QE largely remained unknown but according to Nankin and Schmidt (1), the Treasury Department was authorized by Congress to spend \$700 billion in addressing the financial crisis. On the other hand, the Treasury Department (1) points out that the collective figure spent on TARP, Bailouts and QE was reduced to \$475 billion. However, it is imperative to note that that figure (\$700 billion) is strictly what was committed in 2008 to curb the financial crisis since the New York Tines (1...
2 Pages(500 words)Assignment

### The Golden Rule of Government Spending

One very good government strategy is the United Kingdom’s efforts to sell some of its idle assets which are recommended by the different departments. The different departments of the government are given a free hand to determine whether to maintain, reduce or increase the next accounting period’s budget.
The golden rule of government spending is for the United Kingdom government to limit the output or expenses to the inputs or resources. The government must also be complacent and continue its present sustainable fiscal policies.
One of the major government moves is to target the annual inflation rate. There are many factors that affect inflation. Ordinary lay people interpret inflation as the monthly or eve...
8 Pages(2000 words)Term Paper

### Changing Spending Habits of Indians

.... The investment required by companies is relatively lower in the case of India as one Australian Dollar converts to as much as forty two Indian Rupees (XE Currency Calculator, 2010). Considering the social factors of the country, it is clear that the markets are developing and so is the population with the higher levels of inclination to improved living and life style and a willingness to spend (George, 2009). The economic condition of the country has also seen intense growth and the need for innovative products and services are well received within the country. A report on the changing spending habits of Indians has shown that the Indian choices have been changing to a great extent post globalization and a few examples of this are clearly...
10 Pages(2500 words)Essay

### UK Government Cuts Spending: Theories and Effects

...UK GOVERNMENT CUTS SPENDING: THEORIES AND EFFECTS by 19 August UK Government Cuts Spending: Theories and Effects The past financial crisis became a good test to the stability of economic and financial systems in the United Kingdom. The UK finally came to realize the seriousness of its budgetary constraints and an urgent need to restructure its attitudes toward government spending. Actually, government spending has become the major target of economic reforms in 2010: on May 24, 2010 the UK government announced the major areas which the decision to cut spending would touch. Transport, education, work and pensions, culture, law and environment officials are the first to experience the effects of reduced government spending. Excessive...
9 Pages(2250 words)Case Study

### Resolving the Fiscal Crisis in the United States: Cutting the Corrections Spending

...Of Resolving the Fiscal Crisis in the United s: Cutting the Corrections Spending Introduction For over three decades now, America continues to experience fiscal crisis and the burgeoning prison population. To solve these problems, it has been suggested to cut the corrections expenditure by reducing the prison crowd via the prisoners’ early release. On the surface, this solution appears to be practical, if not pragmatic. At the deeper level, however, the budget cut for correction spending poses several important issues; one of these is the threat to public safety. As prisoners are released earlier than expected, the community outside the prison space becomes too vulnerable for possible crimes to occur. Moreover, loopholes within the policy...
8 Pages(2000 words)Research Paper

### Military Spending and Economic Growth

...﻿Military Spending and Economic Growth The study of economic expenditure has proved to be something of high impedance to the economy and economic growth of a country. The debate on whether military expenditure affects the economy positively or negatively has been here for a while with both has evidence proving their case. Adam Smith, who is considered to be the father of the modern economics reflected the importance of military expenditure to economic growth by terming it as a government’s first duty. It is undoubtable that military expenditure has some extent of importance to the economic growth of a country. With reference to Asia, this paper aims at discussing the extent to which military spending has promoted economic growth...
10 Pages(2500 words)Research Paper

### Analysis of The Politics of Public Budgeting: Getting and Spending, Borrowing, and Balancing (2013) Book by Irene S. Rubin

...Book Review This paper is a review of the book The Politics of Public Budgeting: Getting and Spending, Borrowing and Balancing by Irene S. Rubin. The subtitle of the book suggests the reader regarding the breadth of the topic that is covered in this book. The author has explained politics of budgeting as involvement of both taxing and spending, and how the connection between these two conditions is reflected in borrowing and balancing. The one difference that can be seen in this book with that of other budgeting books is that Rubin’s book emphasizes more on public spending than on taxation. According to Rubin the study of public budgeting in its entirety is not possible if spending strategies are not analyzed based on the revenue patterns...
4 Pages(1000 words)Book Report/Review