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Author Question: If MPC = 0.8, a 200 billion increase in government purchases would have what size effect on the ... (Read 94 times)

HudsonKB16

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on: Jun 30, 2018
If MPC = 0.8, a 200 billion increase in government purchases would have what size effect on the first round of induced added consumption, and what total effect on AD?
 a. increase first round consumption by 80 billion; increase AD by 400 billion
  b. increase first round consumption by 160 billion; increase AD by 1 trillion
  c. increase first round consumption by 200 billion; increase AD by 1 trillion
  d. increase first round consumption by 800 billion; increase AD by 4 trillion

Question 2

If the deposit expansion multiplier is 20, what is the reserve requirement in the banking system?
 a. 20 percent
  b. 50 percent
  c. 2 percent
  d. 5 percent
  e. 10 percent


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janeli1

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Reply #1 on: Jun 30, 2018
Answer to Question 1

b

Answer to Question 2

d


HudsonKB16

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Reply #2 on: Jun 30, 2018
Thank you


janeli1

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Reply #3 on: Jun 30, 2018
No problemo


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