q1)Assume there are no taxes or imports. The government estimates that between 2008 and 2009 disposable income decreased by $300 billion and consumption expenditure decreased by $180 billion. Based on these data, the multiplier equals

a)2.5.

b)0.6

c)1.67

d)0.4 q2)

Disposable inome (thousands of dollars)	Consumption expenditure (thousands of dollars)
200	225
300	300
400	375
500	450

(a)Calculate MPC.

(b) What is the value of saving when YD=500?

a) a. 0.75

b. S= 40

b)a. 0.75

b. S= 30

c)a. 0.25

b. S= 50

d)a. 0.75

b. S= 50

Q3: In an economy, the consumption function is C = 100 + 0.8Y.

a.What is the value of expenditure multiplier?

b.What does Y stand for in the above consumption function?

A)a. Multiplier= 5

b. saving

B)a. Multiplier= 3

b. GDP

C)a. Multiplier= 4

b. GDP

D)a. Multiplier= 5

b. GDP

Real GDP (trillions of 2005 dollars)	Aggregate expenditure (trillions of 2005 dollars)
0	0.3
1.0	1.2
2.0	2.1
3.0	3.0
4.0	3.9
5.0	4.8

The data in the above table indicate that autonomous expenditure is

A)None of the above answers is correct.

B)$4.8 trillion.

C)$3.0 trillion.

D)$0.3 trillion.

Real GDP (trillions of 2005 dollars)	Aggregate expenditure (trillions of 2005 dollars)
0	0.3
1.0	1.2
2.0	2.1
3.0	3.0
4.0	3.9
5.0	4.8

In the above table, equilibrium expenditure is

A)None of the above answers are correct.

B)$4.8 trillion

C)$3.0 trillion.

D)$0.3 trillion.

Real GDP (trillions of 2005 dollars)	Aggregate expenditure (trillions of 2005 dollars)
0	0.3
1.0	1.2
2.0	2.1
3.0	3.0
4.0	3.9
5.0	4.8

The data in the above table indicate that the slope of the AEcurve is___________, and the value of the multiplier_________

A)0.30, multiplier= 5.0

B)0.50, multiplier= 9.0.

C)0.90, multiplier= 10.0

D)None of the above answers are correct.