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____ 30. If the marginal propensity to consume is 0.7, the expenditure multiplier is
e. not determinable without additional information.
____ 31. If the marginal propensity to consume is 0.6 and investment spending declines by $50 billion, by how much
will equilibrium output change?
a. -$125 billion
b. -$83.3 billion
c. -$50 billion
d. $83.3 billion
e. $125 billion
____ 32. Suppose the MPC is 0.9. If autonomous consumption spending increases by $20 billion, equilibrium output
a. increase by $22.2 billion
b. increase by $200 billion
c. not change because the MPC only changes consumption when income changes
d. not change because the expenditures multiplier only applies to changes in investment
spending and government purchases
e. increase by $18 billion.
____ 33. If the marginal propensity to consume is 0.6...
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This note was uploaded on 02/07/2014 for the course ECON 1020-02 taught by Professor Rahman during the Spring '13 term at Tulane.
- Spring '13