If MPC = 0.8, a 200 billion increase in government purchases ...

[HudsonKB16]

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

[janeli1]

Answer to Question 1

b

Answer to Question 2

d

[HudsonKB16]

Thank you

[janeli1]

No problemo