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Multiplier Yr 12

Authored by A Sheikh

Other

12th Grade

Used 2+ times

Multiplier Yr 12
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13 questions

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1.

MULTIPLE CHOICE QUESTION

45 sec • 1 pt

The marginal propensity to consume (MPC) in Hamsterville is 0.75


What will be the size of the change in aggregate demand that will occur as a result of a $1 million dollar increase in the government spending component of AD?

$0.75 million

$4 million

$0.25 million

$3 million

$1.75 million

2.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Calculate (i) the value of the multiplier and (ii) the change in income if there is an increase in exports of £5 billion and the MPC is 0.6.

2, £2 billion

2.5, £12.5 billion

1.67, £7.46 billion

£2.5, £8 billion

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Assume Gerbilia's marginal propensity to save (MPS) is 0.3


By how much will household consumption increase as a result of an increase in disposable incomes of $2000?

$600

70%

$2000

$1400

$700

4.

MULTIPLE CHOICE QUESTION

45 sec • 1 pt

The value of the multiplier will increase if

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

5.

MULTIPLE CHOICE QUESTION

45 sec • 1 pt

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

6.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Calculate (i) the value of the multiplier and (ii) the change in income if there is an increase in government spending of £10 billion and the MPS is 0.2, the MPT is 0.3 and the MPM is 0.2.


Where:

MPS = marginal propensity to save

MPM = marginal propensity to import

MPT = marginal propensity to tax

2, £2.5 billion

0, £10 billion

1.43, £14.3 billion

3.33, £33.3 billion

7.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

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.

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