203-tutorial-3 - Econ 203 Tutorial #3 Date: Week of Jan....

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Econ 203 Tutorial #3 Date: Week of Jan. 30-Feb.5 Coverage: Chapter 6 Output, Aggregate Expenditure and Aggregate Demand Part I: Multiple Choice Questions 1. Let the goods market multiplier to be equal to 10. Suppose some private firms have gone into bankruptcy because of the stock market crash. If the losses in investment expenditures due to these bankruptcies are equal to $25,000,000, then the change in GDP would be equal to a. $250,000,000. b. $500,000,000. c. -$250,000,000. d. -$500,000,000. 2. The ADQ wants the Liberal government to spend more money on building low-income housing. If the ADQ wants the spending to have maximum effect on economic growth, which of the following consumption equations would it prefer to see? a. C=90+0.4(Y-T) b. C=80+0.5(Y-T) c. C=150+0.75(Y-T) d. C=100+0.9(Y-T) 3. Consider this quote from Person A: “ I am working full-time right now, and I have the money to buy a $3,000 mountain bike. However, I feel uncomfortable because we do not know if we would have a general election soon, and what kind of economic policies the new party would introduce. I am going to wait and see how things turn out before I buy my bike.” This statement captures a. Person A’s Marginal Propensity to Consume or spending habit. b.
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This note was uploaded on 02/20/2012 for the course ECON 00000112 taught by Professor Ianirvine during the Spring '09 term at Concordia Canada.

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203-tutorial-3 - Econ 203 Tutorial #3 Date: Week of Jan....

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