PARTI: MULTIPLE-CHOICE QUESTIONS 10 marks 1. The MPC for an economy is: a) always 1. b) the slope of the saving schedule or line. c) 1 divided by the slope of the consumption schedule or line. d) 1 divided by the slope of the saving schedule or line, e) the slope of the consumption schedule or line. 2. A hypothetical economy's consumption expenditure level decreases from $140 billion in 2010 to $100 billion in 2011, and its disposable income level falls from $200 billion in 2010 to $150 billion in 2011. Which of the following is true? a) the economy's APC in 2011 equals 0.7. b) the economy's MPC equals 0.8. c) the economy's MPC equals 0.7. d) the economy's APC was higher in 2011 than in 2010. e) the economy's APC and MPC are both 0.7. 3. The greater is the marginal propensity to consume, the a) lower is the price level. b) higher is the interest rate. c) higher is the price level. d) lower is the average propensity to consume. e) smaller is the marginal propensity to save. 4. If the spending by government of $10 billion results in a $40 billion increase in aggregate expenditure, is the multiplier and is the MPC a) 1:4 b) 25, 3/4 c) 4; 3/4 d) 3; 2/3 e) 4; 1/4