In the IS-LM model, if government spending rises by $1,000 and if the marginal propensity to consumer is equal to 0.90, then equilibrium output will rise by

Equilibrium output will rise by $10,000.

Explanation:

Marginal propensity to consume (MPC) shows the change in the amount consumption expenditure by consumer as a result of change in the national income.

In order to calculate the amount by which equilibrium output will rise, we need to first calculate the multiplier as follows:

Multiplier = 1 / (1 - MPC) = 1 / (1 - 0.9) = 1 / 0.1 = 10

Since we also have:

Amount of rise in government spending = $1,000

Therefore, we have:

Effect $1,000 rise in government spending on equilibrium output = Amount of rise in government spending * Multiplier = $1,000 * 10 = $10,000

Therefore, equilibrium output will rise by $10,000.

lbc corporation makes and sells a product called product wz. each unit of product wz requires 4.1 hours of direct labor at the rate of $20.00 per direct labor-hour. management would like you to prepare a direct labor budget for june. the company plans to sell 28,000 units of product wz in june. the finished goods inventories o

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