Refer to Figure 27-12. An increase in government purchases of 200 ...

[luminitza]

Refer to Figure 27-12. An increase in government purchases of 200 billion causes aggregate demand to shift ultimately from AD1 to AD2.
 
  Assuming a constant price level, the difference in real GDP between point A and point B will be ________ 200 billion.
  A) less than
  B) equal to
  C) greater than
  D) There is insufficient information given here to draw a conclusion.

Question 2

C = 2,550 + (MPC)Y
  I = 800
  G = 1,100
  NX = 50
 
  If the equilibrium level of GDP is 11,250, using the equations for C, I, G, and NX shown above, find the value of the marginal propensity to consume.
 
  What will be an ideal response?

[heyhey123]

Answer to Question 1

C

Answer to Question 2

Y = C + I + G + NX.
11,250 = 2,550 + (MPC)11,250 + 800 + 1,100 + 50.
11,250 = 4,500 + (MPC)11,250.
6,750 = (MPC)11,250.
0.6 = MPC.