7. The accelerator coefficient in an economy is given as 2.00, as a result there is net capital additions of $ 400, what could be the increase in aggregate output? 8. If government expenditure increases by AED 30 in an economy with current level of income is $500, the marginal propensity to consume is 0.75. What should you do to bring price stability if you know that full employment level of income for this country is $570 with tax as policy? (4 marks) 9. Which of the following $10,000 flows generates the highest marginal efficiency of capital? a. $1000 received at the end of each year for 10 years. b. $1250 received at the end of each year for 8 years. c. $2000 received at the end of each year for 5 years. d. $2500 received at the end of each year for 4 years. 10. If there is full employment with price stability, taxes and government spending are increased by an equal amount, the economy will a. Remain at full employment and price stability b. Will be at less than full employment c. Will experience inflation. d. None of the above. 11. In a closed economy with no government, a AED 1 billion increase in investment leads to a AED 5 billion increase in National Income. What is the value of the marginal propensity to consume? 12. If there is less than full employment, if taxes and government spending is increased by an equal amount, the economy will a. Remain at full employment and price stability b. Will be at less than full employment c. Will experience inflation. d. National Income will increase