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Consider an economy with households, government, firms and foreign trade. Government spending is financed by a proportional tax of t = 0.2 and debt. There is an exogenous increase in exports of 10 billion. By how much will equilibrium output change if the MPC is c = 0.8 and the marginal propensity to import is z - 0.1? (Answers rounded to nearest billion). O A. Not enough information to answer this question. O B. Decrease by 22 billion. O C. Decrease by 11 billion. O D. Decrease by 28 billion. QUESTION 2 Which of the following events is most likely to lead to a commercial bank facing a solvency crisis? O A. Rishi Sunak announces plans to increase national revenues to pay down the UK's debt. O B. In 2020 UK small business debt increased significantly, leading to a large number of bankruptcies in 2022. O C. Upset with the customer service she was receiving, Kanchana closes her account with HSBC and moves her banking to Loyds. O D. Last month Jesse missed his credit card payment. QUESTION 3 Suppose nominal GDP increased in a given year. Based on this information, we know with certainty that O A. real output and the price level (GDP deflator) have both increased. O B. either real output or the price level (GDP deflator) have increased. O C. the price level (GDP deflator) has increased. O D. real output has increased.Estimates show that the average UK household holds in cash the equivalent of 5% of its total bank deposits, with the rest of their money deposited into banks. Reserve requirements for commercial banks are 129%. Given this, if the monetary base is increased by $100 what will be the increase in the money supply? O A. E391. O B. E726. C. E513. O D. E618. QUESTION 5 If the U.S. enters a recession (but the UK does not) what do we expect to happen to the UK's trade balance? What about UK output? A. Increase, increase. O B. Decrease, increase. C. Decrease, decrease. O D. Increase, decrease