Author Question: If MPC = 2/3, a decrease in government purchases of 10 billion will ultimately lead to: a. a 30 ... (Read 31 times)

SO00 · **on:** Jun 30, 2018

If MPC = 2/3, a decrease in government purchases of 10 billion will ultimately lead to:
a. a 30 billion increase in aggregate demand.
b. a 10 billion increase in aggregate demand.
c. a 10 billion decrease in aggregate demand.
d. a 30 billion decrease in aggregate demand.

Question 2

Suppose that Mr. Chopp withdraws 500 from his checking account. If the reserve requirement is 5 percent, what will be the maximum potential change in the money supply forthcoming from Mr. Chopp's transaction?
a. 10,000
b. 500
c. 0
d. -500
e. -10,000