Author Question: Consider an economy that is in equilibrium with real GDP = 5,000 . MPS = 1/4 and MPI = 1/5 . What ... (Read 18 times)

biggirl4568 · **on:** Jun 30, 2018

Consider an economy that is in equilibrium with real GDP = 5,000 . MPS = 1/4 and MPI = 1/5 . What will be the new equilibrium level of income if planned investment spending increases by 500?
a. 15,000
b. 7,000
c. 6,111
d. 5,500
e. 5,000

Question 2

A decrease in the price of a good would
a. increase the supply of the good.
b. increase the quantity demanded of the good.
c. give producers an incentive to produce more to keep profits from falling.
d. shift the supply curve for the good to the left.