Question 1

If the MPC is 0.17, the simple multiplier will be _____________.

Question 2

If a $122 decrease in investment spending causes income to decline by $122 in the first round of the multiplier process and by $92 in the second round, the multiplier in the economy is ___________________.

Question 3

Assume the MPC is 0.69. If investment spending increases by $41, the level of GDP will increase by $_____________.

Question 4

If the equation for the consumption schedule is C = 69 + 0.78Y, where C is consumption and Y is disposable income, then the average propensity to consume is 0.7 when disposable income is _________________.

Question 5

If the MPC in an economy is 0.64, government could shift the aggregate demand curve rightward by $442 at each price level by decreasing taxes by $_____________.

Question 6

In an economy, the government wants to increase aggregate demand by $1,080 at each price level to increase real GDP and reduce unemployment. If the MPC is 0.64, then it could increase government spending by $_____________.

Question 7

If the MPS in an economy is 0.12, government could shift the aggregate demand curve rightward by $371 at each price level by increasing government spending by $____________.