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2002PRELIM1 - PART I Multiple Choice 10 points(each...

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PART I: Multiple Choice: 10 points (each question worth ½ point) 1. Assume planned investment falls by $200 billion and the equilibrium level of national income (Y) falls by $500 billion. Given this information, we know that: a. the MPC = 0.9 b. the MPC = 0.8 c. the MPC = 0.75 d. the MPC = 0.5 e. none of the above. In figure above, if the economy is in a recession, what must happen to reach potential GDP? d. The expenditure level must fall and/or the price level must rise e. The expenditure level must rise and/or the price level must fall f. The expenditure level must rise and/or the price level must rise g. The expenditure level must fall and/or the price level must fall h. None of the above 4. Whenever there is an increase in autonomous consumption spending, there will be 5. Which of the following actions by the Fed will result in a decrease in the money supply?
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6. When money demand is a positive function of income, which of the following statements in TRUE?
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