Multiplier

When  income is $200 consumption is $140, and when income is $250 consumption is $180. The marginal propensity to save is

• 0.80
• 0.75
• 0.25
• 0.20

With an MPS of 0.2, an increase in government spending of $240 m will result in the equilibrium level of income rising by

• $1200m
• $480m
• $960m
• $2400m

The value of the multiplier will increase if

• autonomous investment increases.
• induced investment increases.
• the MPC decreases.
• the MPS decreases.

If the value of the investment multiplier is 5, an autonomous increase in

• income of $10 will result in investment increasing by $50.
• investment of $10 will result in income increasing by $60.
• investment of $10 will result in consumption increasing by $40.
• consumption of $10 will result in investment increasing by $40.

If taxation decreased by $20 million and government spending decreased by $20 million, other things being equal, the equilibrium level of income will

• increase by $20 million.
• remain unchanged.
• fall by $20 million.
• rise by $40 million

Lionsville is an open economy with a complex multiplier of 2.5. The current level of GDP is $250m below the full employment level of GDP. For the government to close this gap, it needs to increase its spending by

• $250 million.
• $100 million.
• $10 million.
• $625 million.

People in Oobi Doobi spend 80% of any change in income. If taxation decreased by $20 million and government spending decreased by $16 million, other things being equal, the equilibrium level of income will

• decrease.
• increase.
• decrease initially, then increase.
• not change.

In the Startrek economy, a fall in taxation of $20billion results in an increase in national income of $80billion. Thus, in Startrek the MPC is _____ and the value of the multiplier is _______.

• 0.80; 5
• 0.75; 4
• 0.80; 4
• 0.75; 5