Question : 21) If autonomous spending increases by $500 billion and, as : 1240567

 

21) If autonomous spending increases by $500 billion and, as a result, equilibrium real GDP increases by $2 trillion, then we know that the

A) MPC is greater than 1.

B) expenditure multiplier is 0.25.

C) expenditure multiplier is 4.0.

D) MPC equals 1.

E) expenditure multiplier is 2.0.

 

22) A $1.5 trillion increase in investment leads equilibrium expenditure to increase from $7.0 trillion to $10.5 trillion. In this case, the expenditure multiplier is

A) 1.50.

B) 2.33.

C) 4.67.

D) 7.00.

E) 10.5.

23) An economy has no imports or income taxes. An increase in autonomous expenditure of $40 billion increases equilibrium expenditure by $160 billion. The expenditure multiplier equals

A) 2.

B) 4.

C) 6.

D) 8.

E) 16.

 

24) As a result of an initial increase in investment of $200 billion, real GDP increased by $800 billion. Given this information, the expenditure multiplier equals

A) 6.

B) 2.

C) 4.

D) 1/4.

E) $800 billion.

 

25) The MPC is 0.90 and there are no income taxes or imports. If government expenditures on goods and services increases by $2.0 billion, after the multiplier effect works out, aggregate expenditure increases by

A) $1.8 billion.

B) $2.22 billion.

C) $10 billion.

D) $20 billion.

E) $2.0 billion.

26) An economy has no imports or income taxes. The MPC is 0.75 and real GDP is $120 billion. Businesses increase investment by $4 billion. The new level of real GDP is

A) $124 billion.

B) $128 billion.

C) $132 billion.

D) $136 billion.

E) $140 billion.

 

27) In an economy with no income taxes or imports, if the MPC is .75, the multiplier is

A) 0.25.

B) 0.33.

C) 0.50.

D) 4.00.

E) 3.00.

 

28) In an economy with no income taxes or imports, if the multiplier is 5, what does the MPC equal?

A) 0.5

B) 0.4

C) 0.8

D) 0.2

E) 0.9

29) If the marginal propensity to consume is very close to zero, then the multiplier

A) is very close to zero.

B) is very close to one.

C) is very large.

D) cannot be calculated.

E) might be negative if the marginal tax rate is large enough.

 

 

30) The above table contains information about the nation of Syldavia. There are no income taxes or imports in this nation. The marginal propensity to consume in Syldavia is equal to

A) 0.80.

B) 0.20.

C) 5.00.

D) 0.75.

E) 0.40.

 

31) The above table contains information about the nation of Syldavia. There are no income taxes or imports in this nation. When real GDP is $15 billion, firms’ inventories experience an unplanned

A) decrease of $10 billion.

B) increase of $4 billion.

C) increase of $10 billion.

D) decrease of $1 billion.

E) increase of $5 billion.

32) The above table contains information about the nation of Syldavia. There are no income taxes or imports in this nation. The equilibrium expenditure is

A) $15 billion.

B) $25 billion.

C) $10 billion.

D) $20 billion.

E) $30 billion.

 

33) The above table contains information about the nation of Syldavia. There are no income taxes or imports in this nation. The expenditure multiplier is equal to

A) 0.8.

B) 5.

C) 2.

D) 1.25.

E) 10.