6/56. If, in response to an increase in investment of $10 billion, equilibrium income rises by a total of $50billion, then the marginal propensity to save is?
A. 0.1
B. 0.2
C. 0.5
D. 0.8
E. 0.9
8/58. If the marginal propensity to consume is 0.9, what is the maximum amount the equilibrium gross national product could change if government expenditures increase by $1 billion?
A. It could decrease by up to $9 billion
B. It could increase by up to $0.9 billion
C. It could increase by up to $1 billion
D. It could increase by up to $9 billion
E. It could increase by up to $10 billion
9/59. Which of the following would increase the value of the multiplier?
A. An increase in government expenditure
B. An increase in exports
C. A decrease in government unemployment benefits
D. A decrease in the marginal prosperity to consume
E. A decrease in the marginal propensity to save
10/60. An increase in which of the following will increase the value of the spending multiplier?
A. The supply of money
B. Equilibrium output
C. Personal income tax rates
D. The marginal propensity to consume
E. The required reserve ratio
14/64. Which of the following will result in the greatest increase in aggregate demand?
A. a $100 increase in taxes
B. a $100 decrease in taxes
C. a $100 increase in government expenditures
D. a $100 increase in government expenditures, coupled with a $100 increase in taxes
E. a $100 increase in government expenditures, coupled with a $100 decrease in taxes
17/67. Which of the following will most likely result from a decrease in government spending?
A. An increase in output
B. An increase in the price level
C. An increase in employment
D. A decrease in aggregate supply
E. A decrease in aggregate demand
18/68. Current equilibrium output equals $2,500,000, potential output equals $2,600,000, and the marginal propensity to consumer equals 0.75. Under these conditions, a Keynesian economist is most likely
to recommend:
A. decreasing taxes by $25,000
B. decreasing taxes by $100,000
C. increasing government spending $25,000
D. increasing government spending by $33,333
- increasing government spending by $100,000
22/72. The value of the spending multiplier decreases when:
A. tax rates are reduced
B. exports decline
C. imports decline
D. government spending increases
E. the marginal propensity to save increases
37/87. The aggregate demand curve is downward sloping because as the price level increases the:
A. purchasing power of wealth decreases
B. demand for imports decreases
C. demand for interest-rate sensitive expenditures increases
D. demand for domestically produced substitute goods increases
E. real value of fixed assets increases
38/88. According to Keynesian analysis, if government expenditures and taxes are increased by the same
amount, which of the following will occur?
A. Aggregate supply will decrease
B. Aggregate supply will increase
C. Aggregate demand will be unaffected
D. Aggregate demand will decrease
E. Aggregate demand will increase
*** Bonus ***
5/55. Which of the following will occur as a result of an improvement in technology.
A. The aggregate demand curve will shift to the right
B. The aggregate demand curve will shift to the left
C. The aggregate supply curve will shift to the right
D. The aggregate supply curve will shift to the left
E. The production possibilities curve will shift inward