1) If private investment increases from 40 million to 60 million and it results in national

income increasing from 500 million to 600 million then the value of the multiplier is

a. 3 b. 5 c. 4 d. 6

2) According to Keynes General Theory, which of the following is true? a. Aggregate supply determines and economy's output and employment

b. Government has no role to play in an economic recession

c. Prices and wages adjust when markets are in disequilibrium

d. Aggregate demand determines an economy's output and employment

3) If the consumption function is given as C = 200 + 0.95Y, what is the corresponding

savings function?

a. S = 200 + 0.05Y

b. S = 200 + 0.15Y

c. S = -200 - 0.05

d. S = -200 + 0.05Y

4) When there is unplanned inventory investment, aggregate planned expenditure is ________ real GDP and actual investment is ________ planned investment.

a. less than; less than

b. greater than; less than c. less than; greater than

d. greater than; greater than