Author Question: A 100 billion increase in government purchases would: a. increase AD by 500 billion if MPC = 0.8. ... (Read 111 times)

student77 · **on:** Jun 30, 2018

A 100 billion increase in government purchases would:
a. increase AD by 500 billion if MPC = 0.8.
b. decrease AD by 300 billion if MPC = 2/3.
c. decrease AD by 200 billion if MPC = 0.9.
d. decrease AD by 40 billion if MPC = 0.4.

Question 2

If a bank's required reserves equal 270,000 . Suppose the bank holds no excess reserves, and the reserve requirement is equal to 18 percent, what is the value of the bank's total deposits?
a. 900,000
b. 1,500,000
c. 48,000
d. 486,000
e. 150,000