C= 2000 + 0.5(Y-T)

T= 200

G= 400

I= 500______________

1.Refer to Table 11.1. The equilibrium level of income is:

(A)4,800.(B) 5,800. (C) 4,600.(D) 5,600.

2.Refer to Table 11.1. If government spending increases by $100, equilibrium output increases by:

(A)$100. (B) $200. (C) $400.(D) $800.

3.If the marginal propensity to consume is 0.5, the tax multiplier is:

(A)-2.5.(B) -2(C) -1(D) -1.666

4.If the marginal propensity to save is 0.3, the tax multiplier is:

(A)-2.5. (B) -1.67. (C) -1.5. (D) -2.33.

5.Taxes are reduced by $50 billion and income increases by $1,000 billion. The value of the

tax multiplier is:

(A)-4.(B) -20.(C) -10.(D) -5.

6.If the tax multiplier is -6 and taxes are reduced by $100 billion, output:

(A)falls by $100 billion. (B) falls by $600 billion. (C) increases by $600 billion.

(D)increases by $100 billion.

7 The marginal propensity to save is 0.15, the marginal propensity to consume:

(A)is 1.15. (B) is 0.85. (C) is 0.15. (D) cannot be determined by the given information.