If the MPS equals 0.25 and the MPI is 0.15, then an initial ...

[fox]

If the MPS equals 0.25 and the MPI is 0.15, then an initial change in investment spending of 250 million will result in a total change in equilibrium real GDP of 625 million.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 2

According to the income effect, an increase in the price of oranges will:
 a. cause consumers to consume more apples because of greater savings on that good.
 b. cause consumers to spend more on oranges because a higher price signals that oranges are better than apples.
  c. cause consumers to replace some oranges with other fruit that is now relatively cheaper than oranges.
 d. leave consumers with less real income to spend on all goods.

[b614102004]

Answer to Question 1

True

Answer to Question 2

d

[fox]

Correct answers!

[b614102004]

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