If the MPS is 0.20 and the current GDP is $14,000 and the target level of GDP is $12,000, what change ingovernmentspending would be required to reach the target?

Formulas:See Multiplier formulas at beginning of the exam.

Group of answer choices

increase government spending by $400.

decrease government spending by $2000.

increase government spending by $2000.

decrease government spending by $400.

If the MPS is 0.20 and the current GDP is $14,000 and the target level of GDP is $12,000, what change ingovernmentspending would be required to reach the target?

Formulas:See Multiplier formulas at beginning of the exam.

Group of answer choices

increase government spending by $400.

decrease government spending by $2000.

increase government spending by $2000.

decrease government spending by $400.

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Question 37

2pts

If the MPC is 0.75 and the current GDP is $100,000 and the target level of GDP is $160,000, what change intaxeswould be required to reach the target?

Formulas:See Multiplier formulas at beginning of the exam.

Group of answer choices

increase taxes by $20,000.

decrease taxes by $60,000.

decrease taxes by $20,000.

increase taxes by $15,000.

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Question 38

2pts

If the MPC is 0.60 and government spending and taxes both increase by $5 billion, then GDP will:

Formulas:See Multiplier formulas at beginning of the exam.

Group of answer choices

decrease by $12.5 billion.

increase by $12.5 billion.

decrease by $5 billion.

increase by $5 billion.