1.When household marginal propensity to save (MPS) increases what happens to the size of the spending multiplier?

2.If Annie's MPC is 0.75, what would she do with an additional dollar?

3.Refer to the data. What is the marginal propensity to save (MPS)?

Disposable income$0$10$20$30$40$50

Consumption51219263340

4.Refer to the table. At what level of GDP is the economy at equilibrium.

GDP$100$200$300$400$500$600$700

Consumption150210270330390450510

Savings-50-103070110150190

Gross Investments70707070707070

5.If the real interest rates should decrease, what effect would this have on investment spending?

6.If housing values should show a large increase, according to the wealth effect, what would happen to consumer spending in the economy?

7.If a business is expecting earnings of $100 when they make an investment of $1,000 and the real interest rates are at 11 percent level, will the business make the $1,000 investment spending?

8.Identify and name any one cause of the instability found in investment spending.

9.If the MPC is 0.75 and investments should increase by $8 billion, what change will occur to GDP? Show all work.

10.According to Keynesian fiscal policy, what appropriate discretionary fiscal policy could be used when the economy is in a recession? (Use any one example)

11.Provide any one example of an automatic stabilizer.

12.Suppose the MPC is 0.90. If the government wishes to increase aggregate demand (total spending) by $60 billion to eliminate the GDP gap, the government's discretionary spending would need to increase by what amount? Show all work.

13.There are many causes of the public (national) debt. Provide any one major cause.

14.Refer to the table. Calculate the public (national) debt. Show all work.

Government SpendingTax RevenueGDP

Year 1$800$835$4,500 b

Year 28508505,000

Year 39759105.700

15.Refer to the following data. Calculate the budget deficit or surplus for Year 3.

Government spendingTax RevenuesGDP

Year 1$450$425$2,000 b

Year 25004503,000

Year 36906504,000

16.If the government's budget is balanced, what happens to the size of the Public (National) Debt? (Increases. Decreases, goes to zero, Remains the same)

17.What part of the government is responsible for determining fiscal policy?

18.Suppose the Government decreases taxes by $100 billion. If the marginal propensity to consume (MPC) is 0.90 by what amount would GDP increase? Show work.

19.According to Keynes, why is Government involvement in the marketplace necessary when there is a recession?

20.According to Keynes, what is the primary cause of recession?

21.According to Government refinancing of the National Debt, the Debt never has to be paid back. Briefly explain why.

22.According to the crowding-out effect, Business investment spending decreases when the Government decides to spend more money? Briefly explain why that happens.

23.What was the Federal Government budget deficit for Fiscal Year 2020?