BMW M3 Forum (E90 E92)

BMW Garage BMW Meets Register Search Today's Posts Mark Forums Read


Go Back   M3Post - BMW M3 Forum > BIMMERPOST Universal Forums > Off-Topic Discussions Board
 
Steve Thomas BMW
Post Reply
 
Thread Tools Search this Thread
      04-14-2011, 11:16 PM   #1
-=Hot|Ice=-
Been There, Done That.
-=Hot|Ice=-'s Avatar
United_States
184
Rep
4,727
Posts

 
Drives: 2013 BMW M3
Join Date: Jan 2008
Location: Maryland

iTrader: (0)

Economics help!

I am totally lost. A little help, please?

1. Assume that the MPC is .7 and the formula for the fiscal multiplier is as follows: 1/(1-MPC)


Show your work for each part of the equation:


By how much will AD at current prices shift/increase with

A.) A $185 billion increase in government purchase
B.) A $185 billion tax cut

What will the cumulative or total AD shift/increase be(after the multiplier effect) for:

C.) Part A Above
D.) Part B Above.


Assume the Economy has a recessionary GDP gap of 615 billion and an upward sloping AS curve. Will the cumulative impact oft he increase in government spending in part (C) be enough to close the GDP gap? Explain.
__________________
Quote:
Originally Posted by Jaypod View Post
You sound like my buddies who have AMG's - Slam the gas, slam the brakes...
Appreciate 0
      04-14-2011, 11:26 PM   #2
-=Hot|Ice=-
Been There, Done That.
-=Hot|Ice=-'s Avatar
United_States
184
Rep
4,727
Posts

 
Drives: 2013 BMW M3
Join Date: Jan 2008
Location: Maryland

iTrader: (0)

Anyone?
__________________
Quote:
Originally Posted by Jaypod View Post
You sound like my buddies who have AMG's - Slam the gas, slam the brakes...
Appreciate 0
      04-14-2011, 11:36 PM   #3
skinnycow
condoms prevent minivans
United_States
45
Rep
223
Posts

 
Drives: Batmobile
Join Date: Nov 2010
Location: Kitchen

iTrader: (0)

Send a message via AIM to skinnycow
yeah, give me a sec.
__________________
I have strong opinions about things that don't matter.
Appreciate 0
      04-14-2011, 11:56 PM   #4
-=Hot|Ice=-
Been There, Done That.
-=Hot|Ice=-'s Avatar
United_States
184
Rep
4,727
Posts

 
Drives: 2013 BMW M3
Join Date: Jan 2008
Location: Maryland

iTrader: (0)

Quote:
Originally Posted by skinnycow View Post
yeah, give me a sec.
__________________
Quote:
Originally Posted by Jaypod View Post
You sound like my buddies who have AMG's - Slam the gas, slam the brakes...
Appreciate 0
      04-15-2011, 12:18 AM   #5
skinnycow
condoms prevent minivans
United_States
45
Rep
223
Posts

 
Drives: Batmobile
Join Date: Nov 2010
Location: Kitchen

iTrader: (0)

Send a message via AIM to skinnycow
a.
1 / (1 - .7)
1 / .3
3.33 or 3 1/3 multiplier

b.
(-.7) / (1 - .7)
(-.7) / (.3)
-2.33 or -2 1/3

c.
[(-$185) x (-.7)] / (1 - .7)
$129.5 / .3 = $431.66 or $431 2/3 billion

d.
($185) / (1-.7)
$185 / .3 = $616.66 or $616 2/3 billion

e.
No, based off the multiplier of $185 billion increased government spending, the result will be $431.33 billion. Unlike the tax cut, the same amount in government spending will not be enough to close the gap of $615 billion. A tax cut of $185 billion would close the gap, using the multiplier.



its been awhile, but everything should be correct. i'm 80% sure e is right, but look over it to make sure it makes sense.
__________________
I have strong opinions about things that don't matter.
Appreciate 0
      04-15-2011, 12:19 AM   #6
arggg45
Second Lieutenant
No_Country
3
Rep
245
Posts

 
Drives: fairly quickly.
Join Date: Oct 2010
Location: finding the end of the road

iTrader: (0)

Garage List
Quote:
Originally Posted by skinnycow View Post
a.
1 / (1 - .7)
1 / .3
3.33 or 3 1/3 multiplier

b.
(-.7) / (1 - .7)
(-.7) / (.3)
-2.33 or -2 1/3

c.
[(-$185) x (-.7)] / (1 - .7)
$129.5 / .3 = $431.66 or $431 2/3 billion

d.
($185) / (1-.7)
$185 / .3 = $616.66 or $616 2/3 billion

e.
No, based off the multiplier of $185 billion increased government spending, the result will be $431.33 billion. Unlike the tax cut, the same amount in government spending will not be enough to close the gap of $615 billion. A tax cut of $185 billion would close the gap, using the multiplier.



its been awhile, but everything should be correct. i'm 80% sure e is right, but look over it to make sure it makes sense.
He's right.
__________________
"It will not have enough power until I can spin the wheels at the end of a long straight in top gear."
-Mark Donohue
Appreciate 0
      04-15-2011, 12:20 AM   #7
-=Hot|Ice=-
Been There, Done That.
-=Hot|Ice=-'s Avatar
United_States
184
Rep
4,727
Posts

 
Drives: 2013 BMW M3
Join Date: Jan 2008
Location: Maryland

iTrader: (0)

Quote:
Originally Posted by skinnycow View Post
a.
1 / (1 - .7)
1 / .3
3.33 or 3 1/3 multiplier

b.
(-.7) / (1 - .7)
(-.7) / (.3)
-2.33 or -2 1/3

c.
[(-$185) x (-.7)] / (1 - .7)
$129.5 / .3 = $431.66 or $431 2/3 billion

d.
($185) / (1-.7)
$185 / .3 = $616.66 or $616 2/3 billion

e.
No, based off the multiplier of $185 billion increased government spending, the result will be $431.33 billion. Unlike the tax cut, the same amount in government spending will not be enough to close the gap of $615 billion. A tax cut of $185 billion would close the gap, using the multiplier.



its been awhile, but everything should be correct. i'm 80% sure e is right, but look over it to make sure it makes sense.

You rock my world.
__________________
Quote:
Originally Posted by Jaypod View Post
You sound like my buddies who have AMG's - Slam the gas, slam the brakes...
Appreciate 0
      04-15-2011, 12:21 AM   #8
skinnycow
condoms prevent minivans
United_States
45
Rep
223
Posts

 
Drives: Batmobile
Join Date: Nov 2010
Location: Kitchen

iTrader: (0)

Send a message via AIM to skinnycow


what would you guys do without me!
__________________
I have strong opinions about things that don't matter.
Appreciate 0
      04-15-2011, 12:22 AM   #9
-=Hot|Ice=-
Been There, Done That.
-=Hot|Ice=-'s Avatar
United_States
184
Rep
4,727
Posts

 
Drives: 2013 BMW M3
Join Date: Jan 2008
Location: Maryland

iTrader: (0)

Quote:
Originally Posted by skinnycow View Post


what would you guys do without me!
Thank you so much.
__________________
Quote:
Originally Posted by Jaypod View Post
You sound like my buddies who have AMG's - Slam the gas, slam the brakes...
Appreciate 0
      04-15-2011, 12:49 AM   #10
ghosthi32
Banned
25
Rep
2,516
Posts

 
Drives: Water camel
Join Date: Dec 2009
Location: strait of hormuz

iTrader: (0)

wheres btm when you need him
Appreciate 0
      04-15-2011, 12:51 AM   #11
-=Hot|Ice=-
Been There, Done That.
-=Hot|Ice=-'s Avatar
United_States
184
Rep
4,727
Posts

 
Drives: 2013 BMW M3
Join Date: Jan 2008
Location: Maryland

iTrader: (0)

Quote:
Originally Posted by ghosthi32 View Post
wheres btm when you need him
No need to fear, Skinnycow was here.
__________________
Quote:
Originally Posted by Jaypod View Post
You sound like my buddies who have AMG's - Slam the gas, slam the brakes...
Appreciate 0
      04-15-2011, 12:51 AM   #12
CollinsE90
Where my bitches
CollinsE90's Avatar
United_States
227
Rep
1,927
Posts

 
Drives: Cadillac coupe deville
Join Date: Mar 2009
Location: street corner checking profits

iTrader: (0)

Quote:
Originally Posted by ghosthi32 View Post
wheres btm when you need him
passed out drooling on the keyboard after a bottle of wine
__________________
Appreciate 0
      04-15-2011, 12:52 AM   #13
Wakka
but no flokka
Wakka's Avatar
United_States
36
Rep
440
Posts

 
Drives: 2009 1er
Join Date: Jun 2009
Location: Tampa

iTrader: (0)

what collin said
__________________
M-Sport, 6MT, Hardwired V1, StopTech Sportpack, Perf. Intake, Perf. Exhaust, AFE Scoops, Perf. Carbon Spoiler, Perf. Carbon Diffuser, Enkei RPF1's, Conti Extreme DW's

Quote:
Originally Posted by BTM View Post
Entourage sucks. BTM hates everything
Appreciate 0
      04-15-2011, 01:18 AM   #14
Blake
Banned
No_Country
180
Rep
4,651
Posts

 
Drives: Chevy Aveo
Join Date: May 2008
Location: Parent's Basement

iTrader: (7)

Quote:
Originally Posted by skinnycow View Post
1+1=2
you damn asians and your numbers...
Appreciate 0
      04-15-2011, 01:31 AM   #15
McMuffin
Lieutenant Colonel
McMuffin's Avatar
United_States
27
Rep
1,550
Posts

 
Drives: A Widebody 92
Join Date: Nov 2008
Location: Califas

iTrader: (5)

Quote:
Originally Posted by Blake View Post
you damn asians and your numbers...
Seriously
__________________
Embryo>e92
Appreciate 0
      04-15-2011, 07:32 AM   #16
Grauss
Enlisted Member
United_States
3
Rep
35
Posts

 
Drives: The Flintmobile
Join Date: Jul 2009
Location: Athens, GA

iTrader: (0)

I was like hey, I do economics! But of course, the asian beat the white kid to the answer (not like I was awake at 1:30 in the morning anyway).
Appreciate 0
      04-15-2011, 07:37 AM   #17
BTM
Banned
United_States
172
Rep
10,314
Posts

 
Drives: A///MERICAN!!!
Join Date: Mar 2010
Location: A///MERICA!!!

iTrader: (11)

Garage List
Quote:
Originally Posted by ghosthi32 View Post
wheres btm when you need him
Adopting rigid weekday schedule...bed at 10 wake at 6:30. Didn't check skinny cow's answer but appears correct

Quote:
Originally Posted by CollinsE90 View Post
passed out drooling on the keyboard after a bottle of wine
Appreciate 0
      04-15-2011, 12:56 PM   #18
persian54
Lieutenant General
persian54's Avatar
United_States
285
Rep
15,812
Posts

 
Drives: SL550. Prev: E93 M3/335i/Z435i
Join Date: Jun 2009
Location: The Valley, SoCal

iTrader: (291)

Quote:
Originally Posted by Blake View Post
you damn asians and your numbers...
482(9+3)=288
Appreciate 0
      04-15-2011, 12:59 PM   #19
-=Hot|Ice=-
Been There, Done That.
-=Hot|Ice=-'s Avatar
United_States
184
Rep
4,727
Posts

 
Drives: 2013 BMW M3
Join Date: Jan 2008
Location: Maryland

iTrader: (0)

Skinny, I would like to inform you that you still have it. Got it right. Thanks.
__________________
Quote:
Originally Posted by Jaypod View Post
You sound like my buddies who have AMG's - Slam the gas, slam the brakes...
Appreciate 0
      04-15-2011, 03:15 PM   #20
skinnycow
condoms prevent minivans
United_States
45
Rep
223
Posts

 
Drives: Batmobile
Join Date: Nov 2010
Location: Kitchen

iTrader: (0)

Send a message via AIM to skinnycow
Quote:
Originally Posted by -=Hot|Ice=- View Post
Skinny, I would like to inform you that you still have it. Got it right. Thanks.
like a boss

if you need anymore help, let me know.
__________________
I have strong opinions about things that don't matter.
Appreciate 0
      04-15-2011, 07:23 PM   #21
-=Hot|Ice=-
Been There, Done That.
-=Hot|Ice=-'s Avatar
United_States
184
Rep
4,727
Posts

 
Drives: 2013 BMW M3
Join Date: Jan 2008
Location: Maryland

iTrader: (0)

Quote:
Originally Posted by skinnycow View Post
like a boss

if you need anymore help, let me know.
Thanks!
__________________
Quote:
Originally Posted by Jaypod View Post
You sound like my buddies who have AMG's - Slam the gas, slam the brakes...
Appreciate 0
      04-15-2011, 07:40 PM   #22
nnnnnnnnnnnnnnnnnnnnnn
Lieutenant
United_States
20
Rep
469
Posts

 
Drives: 1
Join Date: Jan 2008
Location: 2

iTrader: (0)

Quote:
Originally Posted by skinnycow View Post
like a boss

if you need anymore help, let me know.
I need help taking my pants off...
Appreciate 0
Post Reply

Bookmarks

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Forum Jump


All times are GMT -5. The time now is 05:43 AM.




m3post
Powered by vBulletin® Version 3.7.0
Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.
1Addicts.com, BIMMERPOST.com, E90Post.com, F30Post.com, M3Post.com, ZPost.com, 5Post.com, 6Post.com, 7Post.com, XBimmers.com logo and trademark are properties of BIMMERPOST