Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. If the MPS = 0.2, then the multiplier equals: * 4 5 9 10 2. Suppose that a financial crisis decreasesinvestment spending by $200

1. If the MPS = 0.2, then the multiplier equals: *

4

5

9

10

2.   Suppose that a financial crisis decreasesinvestment spending by $200 billion and the marginal propensity toconsume is 0.75. Assuming no taxes and no trade, real GDP will_____ by _____.

decrease; $500 billion

decrease; $200 billion

decrease; $800 billion

increase; $400 billion

3. An increase in the marginal propensity to consume:

increases the multiplier.

shifts the autonomous investment line upward.

decreases the multiplier.

shifts the autonomous investment line downward.

4. A smaller marginal propensity to save will:

make the multiplier smaller.

make the multiplier larger.

not affect the value of the multiplier.

increase the interest rate.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Economics of Money, Banking and Financial Markets

Authors: Frederic S. Mishkin

9th Edition

978-0321607751, 9780321599797, 321607759, 0321599799, 978-0321598905

More Books

Students also viewed these Economics questions

Question

How do you add two harmonic motions having different frequencies?

Answered: 1 week ago

Question

10 List five different types of intangibles.

Answered: 1 week ago

Question

11 What is goodwill? How is it valued in the balance sheet?

Answered: 1 week ago