Suppose the government in this economy decides to decrease government purchases by $300 billion. The decrease in government purchases will lead to a decrease in income, generating an initial change in consumption equal to:

A) -$1,000 billion
B) -$90 billion
C) -$210 billion
D) -$500 billion
E) -$105 billion

This decreases income yet again, causing a second change in consumption equal to:

A) -$1,000 billion
B) -$90 billion
C) -$210 billion
D) -$500 billion
E) -$107 billion

The total change in demand resulting from the initial change in government spending is:

A) -$0.6 trillion
B) -$0.7 trillion
C) -$2.7 trillion
D) -$1 trillion

initial change in consumption  =  $210 billion

correct option C) -$210 billion

Explanation:

given data

purchases amount = $300 billion

we consider here marginal propensity to consume is =  0.7

and oversimplified multiplier = 3.33

solution

we get here  initial change in consumption tat is

initial change in consumption  is = MPC × purchases amount 1

initial change in consumption  = 0.7 ×  $300  

initial change in consumption  =  $210 billion

and

here  decreases income again causing of change in consumption that si decreases income  =  initial change × MPC 2

decreases income  = $210 billion  × 0.7

decreases income  = $147 billion

and

now we know total change in demand by initial change that is

total change in demand = oversimplified multiplier × purchases amount

total change in demand = $300 × 3.33

total change in demand = $1 trillion

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

your welcome leave a rate and a < 3

answer; decentralized;