The value of the expenditure multiplier increases when

tax rates increase.

the marginal propensity to consume increases.

the marginal propensity to consume decreases.

the average propensity to consumer increases.

the average propensity to consume decreases.

Without notice, investment spending dramatically rises in the United States. Explain the impact of this sudden increase in investment spending on each of the following for the United States.

1. Aggregate Demand
2. Output
3. Real capital
4. The Production Possibilities Curve
5. Long-run Aggregate Supply

If in response to an increase in investment of $5 billion, equilibrium output rises by a total of $20 billion, then the marginal propensity to consume is

.6.

.7.

.75.

.8.

.85.

When nominal GDP is $900 and the price index is 150, real GDP would equal

$60

$135

$600

$1,350

$6,000

Mr. Divers retired last year with a small pension. He also has a mutual fund account made entirely up of stable fixed-rate bonds. Between the two, he is able to live quite comfortably. How will unanticipated inflation affect Mr. Divers' retirement account?

A.He will not be affected because his pension is adjusted by a COLA in January each year.

B.He is helped because his total income will be greater after inflation.

C.He is hurt because his total income will be smaller after inflation.

D.He is helped because his income will buy more in the future than it would before inflation.

E.He is hurt because his income will buy less in the future than it would before inflation.