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Article SummaryGains in consumer spending and construction gave GDP a bigger boost than was forecast in the second quarter of 2015,growing at an annualized rate of 3.9 percent. Declining energy prices, rising home prices, and increased employmentare being credited for much of the gain in consumer spending, which grew at an annualized rate of 3.6 percent.Increases in commercial and residential construction boosted business investment spending, which grew at an annualrate of 5.2 percent. Government spending also grew at an annual rate of 2.6 percent for the quarter. Economists citedthe primary obstacle for continuing this growth pace in the third quarter is the need to reduce excess inventories.Source: Shobhana Chandra,ʺEconomy in U.S. Picked Up on Consumer Spending, Construction,ʺbloomberg.com,September 25, 2015.243)Refer to the Article Summary.The increase in GDP discussed in the article summary was due inpart to increases in commercial and residential construction. Increases in commercial andresidential construction will cause a(n) ________ the aggregate expenditure curve.A) downward shift ofB) movement down alongC) movement up alongD) upward shift ofAnswer: D243)Page Ref: 796/414Learning Outcome: Macro-8: Investigate the relationship between income and expenditures.TRUE/FALSE. WriteʹTʹif the statement is true andʹFʹif the statement is false.244) The formula for the multiplier is (1-MPC).244)Answer:TrueFalsePage Ref: 800/418Learning Outcome: Macro-8: Investigate the relationship between income and expenditures.245) The larger theMPC, the smaller the value of the multiplier.245)Answer:TrueFalsePage Ref: 801/419Learning Outcome: Macro-8: Investigate the relationship between income and expenditures.246) If the marginal propensity to save is 0.4, the multiplier is 2.5.246)Answer:TrueFalsePage Ref: 798/416Learning Outcome: Macro-8: Investigate the relationship between income and expenditures.247) If the multiplier is 5, the marginal propensity to consume must be 0.8.247)Answer:TrueFalsePage Ref: 798/416Learning Outcome: Macro-8: Investigate the relationship between income and expenditures.248) If the marginal propensity to save is 0.35, the multiplier is 2.86.248)Answer:TrueFalsePage Ref: 797/415Learning Outcome: Macro-8: Investigate the relationship between income and expenditures.249) If the multiplier is 10, the marginal propensity to consume must be 0.1.249)Answer:TrueFalsePage Ref: 797/415Learning Outcome: Macro-8: Investigate the relationship between income and expenditures.55

250) The larger theMPS, the smaller the value of the multiplier.250)Answer:TrueFalsePage Ref: 801/419Learning Outcome: Macro-8: Investigate the relationship between income and expenditures.

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