If the marginal propensity to consume is 0.8. by how much will equilibrium GDP increase as a result of a $500 billion increase in government spending? 0 a} $500 billion 0 hi $2.000 billion 6) c} $400 billion 0 d} $2.500 billion Question 2 {Mandatory} [2 points) v' Saved 5 '3 Listen Q What is the immediate effect 1lnlhen Bank A lends $1,000 to a local resident? O a) Bank A's excess reseryes increase by $1,000. 0 hi The money supply remains unchanged. 6) C} The money supply increases by $1,000. 0 d} The money supply decreases by $1,000. Question 3 (Mandatory) (2 points) Investment spending rises as a result of O a) an increase in money demand. 0 bl a decline in money supply. 0 Cl a decline in aggregate demand. 0 dl a decrease in the interest rate. Question 4 (Mandatory) (1 point) I Saved an The Fed controls the demand for money. Question 5 (Mandatory) (1 point) The value of the U.S. dollar depends on the price of gold. Question 6 {Mandatory} [1 point) I Save-d a The equation of exchange shows that nominal GDP is equal to the velocity of moneyr divided by the money supply. Question 7 (Mandatory) [2 points} v' Saved all If Bank X is holding total cash reserves of $20,000 on deposits of $90,000 and if the reserve requirement is 8 percent, then Bank X is holding excess reserves of O a) $13,500. 0 hi $70,000. 0 C) $1200. G) d] $12,300. Question 8 {Mandatory} [1 point) I Save-d ell Suppose the reserve requirement equals 25 percent. If the Federal Reserve buys bonds worth $100 billion, then total deposits in the banking system can be increased by a maximum of $25 billion. Question 9 {Ma ndatory) (2 points) El '3 Listen h | The interest rate represents 0 33' the opportunity cost of holding money. 0 b) the transactions demand for money. 0 C} the index of creditworthiness for investors. O C\" the market demand for bonds. Question 10 {Mandatory} {2 points) ~/ Saved all [BONUS] Crowding out suggests that deficit spending by the federal government may lead to O 33' an increase in inflation and a decrease in unemployment. O b) an increase in interest rates and an increased impact on AD. 0 C} a decrease in interest rates and an increased impact on international trade. G) C\" an increase in interest rates and a reduced impact on AD