Contractionary fiscal policy consists of:

increased government purchases and increased taxes.

decreased government purchases and decreased taxes.

decreased government purchases and increased taxes.

increased government purchases and decreased taxes.

Given the consumption function C = $758 + 0.65 x Y, an increase in disposable income from $7,640 to $9,080 will cause saving to increase by:

$1,080

$1,440

$2,420

$936

$504

Which of the following statements is true?

If crowding out exists, contractionary fiscal policy will cause the aggregate demand curve to shift in by more than indicated by the government spending multiplier.

If the spending multiplier equals 4 and equilibrium real GDP is $20.80 billion below potential real GDP, then total expenditures need to decrease by approximately $5.20 billion to restore output levels to potential real GDP.

If spending multiplier equals 5, then an initial change in government spending of $10 million will result in a total change in equilibrium real GDP of $15 million.

In general, autonomous spending increases have a greater multiplier effect on real GDP when the economy is open to international trade.

An increase in wealth increases consumption expenditure and causes a rightward shift of the consumption function.