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Using the given data, what is the total Aggregate Demand (AD) in the economy?
Using the given data, what is the total Aggregate Demand (AD) in the economy?
AD = C + I + G + (X - M) = €950 billion + €238 billion + €356 billion - €59 billion = €1,485 billion
If the marginal propensity to consume (MPC) is 0.8, and disposable income increases by €119 billion, what is the change in consumption?
If the marginal propensity to consume (MPC) is 0.8, and disposable income increases by €119 billion, what is the change in consumption?
Change in consumption = MPC × Change in disposable income = 0.8 × €119 billion = €95.2 billion
Given the marginal propensity to save (MPS) of 0.2 (1 - MPC) and the marginal tax rate of 0.42, determine the multiplier effect in this economy.
Given the marginal propensity to save (MPS) of 0.2 (1 - MPC) and the marginal tax rate of 0.42, determine the multiplier effect in this economy.
Multiplier = 1 / (MPS + Marginal Tax Rate) = 1 / (0.2 + 0.42) = 1.63
If government spending increases by €59 billion, what is the expected impact on the overall aggregate demand, given the multiplier effect calculated in the previous question?
If government spending increases by €59 billion, what is the expected impact on the overall aggregate demand, given the multiplier effect calculated in the previous question?
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Explain the significance of the negative value for net exports (€-59 billion) in the context of the Irish economy.
Explain the significance of the negative value for net exports (€-59 billion) in the context of the Irish economy.
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