The multiplier effect is the series of ________ increases in ...

[panfilo]

The multiplier effect is the series of ________ increases in ________ expenditures that result from an initial increase in ________ expenditures.
 
  A) autonomous; consumption; induced B) autonomous; investment; induced
  C) induced; consumption; autonomous D) induced; investment; autonomous

Question 2

C = 3,600 + (MPC)Y
  I = 1,200
  G = 1,400
  NX = -200
 
  If the equilibrium level of GDP is 30,000, 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?

[Joy Chen]

Answer to Question 1

C

Answer to Question 2

Y = C + I + G + NX.
30,000 = 3,600 + (MPC)30,000 + 1,200 + 1,400 - 200.
30,000 = 6,000 + (MPC)30,000.
24,000 = (MPC)30,000.
0.8 = MPC.