Question

Assume that the marginal propensity to consume is equal to 0.85. If the government increased spending

by $Z, and the real GDP increased by $5000, what is the value of Z?

A)$750

B)$1000

C)$900

D)$800

Calculate the multiplier if the marginal propensity to consume (MPC) is equal to 0.99.

A)10000

B)1000

C)500

D)100

Suppose the government increases spending by $100, as a result real GDP will:

A)increase by less than $100.

B)increase by more than $100.

C)increase by $ 100.

D)none of the above.

If the marginal propensity to consume (MPC) is equal to 0.74, then the marginal propensity to save (MPS) is equal to:

A)0.25

B)0.26

C)0.2

D)0.1

Suppose the government increased spending by $100, and as a result real GDP increased by $2000. Calculate the marginal propensity to consume (MPC).

A)0.95.

B)0.9.

C)0.8.

D)0.7

Economics