Study Guide for APC and MPC
Practice Problems for test on Average and Marginal Propensities to Consume and Save
Test: Monday
Read: Pages 177179, Section 9.3 in your ORANGE REVIEW (5 Steps to a 5) book. The
explanation on the multiplier is easier in this book than in your textbook.
1.
What is the formula for MPC?
2.
What is the formula for MPS?
3.
What is the formula for APC?
4.
What is the formula for APS?
5.
What is the difference between the APC and the MPC?
* Make sure to memorize all of the above formulas for the test.
6.
If the MPC is .8, what is MPS?
7.
If MPC is .9, what is MPS?
8.
If MPC is .75, what is MPS?
9.
If MPC is .55, what is MPS?
10. If MPC is .62, what is MPS?
11. If MPC is .88, what is MPS?
12. If MPC is .6, what is MPS?
* In questions 612, note that the two numbers added always equal 1
13. If the MPC is .8, what is the government or investment multiplier?
14. If the MPC is .9, what is the government or investment multiplier?
15. If the MPC is .75, what is the government or investment multiplier?
16. If the MPC is .6, what is the government or investment multiplier?
17. If the MPC is .8, what is the tax multiplier?
18. If the MPC is .9, what is tax multiplier?
19. If the MPC is .75, what is tax multiplier?
20. If the MPC is .6, what is tax multiplier?
21. If the government raises taxes by $200, and the MPC is .9, how much will the
decrease in GDP be?
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 Spring '11
 Mcdounough
 Macroeconomics, Government, Marginal Propensity To Consume, government spending

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