5. The multiplier effect means that a given change in planned expenditure a) b) e) d) 6) will change equilibrium income by an amount less than the initial change in planned expenditure. will change equilibrium income by an amount more than the initial change in planned expenditure. will change equilibrium income by an amount equal to the initial change in planned expenditure. will change the MPC by a multiple of the initial change in planned expenditure. will change the MPS by a multiple of the initial change in planned expenditure. 6. If the equation C= 35+(0.75de), where C is consumption expenditure and Kris disposable income, were graphed: 8) b) 0) d) e) households will consume three-fourths of whatever level of income they receive. households will consume $35 if their disposable income is zero, and will consume three-fourths of any increase in disposable income they receive. there is an inverse relationship between disposable income and consumption. households will save $35 if their disposable income is zero, and will consume three- fourths of any increase in disposable income they receive. MPC would be 0.25 and MP8 would be 0.75. 7. If a family's consumption expenditure exceeds its disposable income, this means that its a) b) c) d) 6) MPC is greater than 1. disposable income is zero. APC is greater than 1. APS is greater than 1. saving is high. 8. How large will the total change in income be from a change in investment of $10 million if the marginal propensity to consume is 0.8? a) $8 million. b) $10 million. c) $12.5 million. d) $18 million. e) $50 million. 9. Which of the following formulas is correct? a) APC+MPS = 1 b) MPC+APS = 1 c) APC+APS = 1 d) APC+MPC= 1 e) APS+MPS = 1