7. If income is zero, consumption A. Is equal to zero B . Is greater than zero C. Cannot be determined D. Is less than zero 8 National income equilibrium occurs when Revenue equal cost of production Aggregate supply equals the nominal value of national income Total expenditures equal total supply in the economy Total injections exceed total leakages 9 Given the consumption function in a two-sector economy is C = 200 + 0.8Y, the value of multiplier in this economy is A. 0.25 B. 2.5 C. 1.25 D. 5 10. Which of the following is a leakage? Subsidies on petrol Imports on medical appliances Direct investments Government expenditure on new school building 11. If a government decides to lower expenditure by $15 million, with MPS = 0.4, the national income will A. rise by $50 million fall by $8 million decrease by $37.5 million increase by $37.5 million 12. For the economy to achieve equilibrium expenditure must exceed income because of taxes income exceeds expenditure because of taxes income must equal expenditure expenditure exceeds income because of government budget deficit 13. If saving is zero, than income is at break even income is bigger than consumption consumption is bigger than income saving is equal consumption