wayground logo

Free Printable Worksheets

NEW

Font size

S
M
L
XL
Worksheets

AP Macro: MPC and the Multiplier

Total questions: 46

Worksheet time: 44mins

Name
Class
Date
1.
The multiplier is:
a)
1/MPC
b)
1/1+MPC
c)
1/MPS
d)
1/1-MPS
2.
Assume MPC is 2/3.  If investment spending increases by $2 billion, GDP will increase by
a)
$3 billion
b)
$2/3 billion
c)
$6 billion
d)
$2 billion
3.
If the MPC is .7 and gross investment spending increase by $3 billion, GDP will
a)
increase by $10 billion
b)
increase by 2.1 billion
c)
decrease by $4.29 billion
d)
increase by $4.29 billion
4.

The proportion of any change in income that is spent rather than saved is

a)

the multiplier

b)

income determinants

c)

marginal propensity to consume

d)

macroeconomic equilibrium

5.

Which of the following does NOT shift the AD curve?

a)

Government Spending

b)

Investment Spending

c)

Long run aggregate supply

d)

Net Exports

6.

Which of the following describes the inflationary gap in the Aggregate Supply and Demand model?

a)
b)
c)
d)
7.

Unemployment is high and GDP is declining. To improve conditions, the government increases spending by $5B. If the MPC is .75, by how much will GDP rise?

a)

$5B

b)

$10B

c)

$15B

d)

$20B

8.

Inflation is high. If the MPS is .25, how much must government cut in spending to decrease AD by $20B?

a)

$1B

b)

$5B

c)

$10B

d)

$20B

9.
what is the relationship b/w MPC AND MPS?
a)
MPC+MPS=0
b)
MPC=MPS
c)
MPC+MPS=1
d)
NONE OF THESE
10.
How much is MPS in an economy when MPC is .8?
a)
.2
b)
3
c)
1.6
d)
.8
11.

If there is an initial injection (e.g. a rise in investment) into the economy then the final increase in aggregate demand and real GDP will be greater. This reflects

a)

economic growth

b)

the multiplier effect

c)

keynesian economic policy

d)

accelerator

12.

Matt Damon, a manager at a Taco Bell, received a $5,000 increase in his annual disposable income. Suppose his marginal propensity to consume is 0.90. How much of the $5,000 increase will Damon save?

a)

$1000

b)

$4500

c)

$4700

d)

$300

e)

$500

13.
If real output exceeds expenditure
a)
inventories will fall
b)
inventories will rise
c)
inventories will remain unchanged
d)
aggregate expenditure will rise
14.

An autonomous increase in aggregate income of $100 leads to additional spending of $80 in the next period and $64 in the following period and so on. From this information the value of the multiplier coefficient is

a)

0.8

b)

1.25

c)

5

d)

6

15.
If the West Australian government decided to build a $1 billion football stadium and the marginal propensity to consume (MPC) for the state economy is 0.8, the level of income will 
a)
remain unchanged
b)
increase by $800 million
c)
increase by $1 billion
d)
increase by $5 billion
16.

An economy is in macroeconomic equilibrium. If Y = 200, C =100, I =30, G=40 and M =30, what is the value of exports?

a)

60

b)

40

c)

90

d)

50

17.

If Jet's disposable income increases from $500 to $550 and his level of personal consumption expenditures increases from $380 to $420, you may conclude that his marginal propensity to

a)

consume is .8

b)

consume is .4

c)

consume is .25

d)

save is .8

e)

save is .25

18.
Consumers spending $120 from a wage increase of $200 implies:
a)
an MPS of 0.8 and a multiplier of 5
b)
an MPS of 0.4 and a multiplier of 2.5
c)
an MPS of 0.6 and a multiplier of 2
d)
an MPS of 0.4 and a multiplier of 3.5
19.
If consumption spending totals $40 million, investment is $30 million, tax revenue totals $15 million, government spending is $10 million, exports are $3 million and imports are $5 million, GDP is...
a)
$103 million
b)
$80 million
c)
$93 million
d)
$78 million
20.
During a recession, which of the following is likely to occur?
a)
an increase in real wages
b)
an increase in production
c)
and increase in the GDP growth rate
d)
an increase in the unemployment rate
21.
The federal government decreases spending by $44 billion dollars. This would cause a shift from
a)
AD 1 to AD 2
b)
AD 1 to AD 3
c)
AD 2 to AD 3
22.
In the Keynesian Aggregate Expenditure Model, if the MPC is .75 and Ig increases by $6 billion, GDP will increase by
a)
$18 billion
b)
$2 Billion
c)
$24 Billion
d)
$12 Billion
23.
What will happen to PL and Y if a major earthquake destroys manufacturing capabilities on the West coast?
a)
Price: Increase
Quantity: Decrease
b)
Price: Decrease
Quantity: Increase
c)
Price: Increase
Quantity: Increase
d)
Price: Decrease
Quantity: Decrease
24.

When Nancy's disposable income is $100,000, her consumption expenditure is $92,000, and when her disposable income is $110,000, her consumption expenditure is $100,000. Nancy's marginal propensity to consume is

a)

.9

b)

1.25

c)

5

d)

.8

e)

.75

25.
Fiscal Policy refers to
a)
increases in taxes to fight recessions
b)
decreases in taxes to fight inflation
c)
changes in spending and taxes
d)
federal deficits
26.

When an economy is in equilibrium at potential

gross domestic product, the actual unemployment

rate is


a)

equal to zero

b)

greater than the natural rate

c)

less than the natural rate

d)

equal to the natural rate

27.
If the government wants to increase employment, government purchases should be ________ and/or taxes should be ________.
a)
increased; decreased
b)
increased; increased
c)
decreased; increased
d)
decreased; decreased
28.
Taxes are increased by $50 billion and income decreases by $300 billion. The value of the tax multiplier is
a)
-3.
b)
-5.
c)
-6.
d)
-15.
29.
If the MPS is 0.4, the government spending multiplier is
a)
0.6.
b)
2.5.
c)
4.
d)
5.
30.
With an MPS of 0.2, an increase in government spending of $240 m will result in the equilibrium level of income rising by
a)
$1200m
b)
$480m
c)
$960m
d)
$2400m
31.

Which of the following would be most effective in combating a recession where T represents Taxes and G represents Government Spending?

a)

T decreases by $25 billion and G decreases by $25 billion

b)

T decreases by $25 billion and G increases by $25 billion

c)

T decreases by $25 billion and G does not change

d)

T increases by $25 billion and G decreases by $25 billion

e)

T increases by $25 billion and G increases by $25 billion

32.
When  income is $200 consumption is $140, and when income is $250 consumption is $180. The marginal propensity to save is
a)
0.80
b)
0.75
c)
0.25
d)
0.20
33.
The value of the multiplier will increase if
a)
autonomous investment increases.
b)
induced investment increases.
c)
the MPC decreases.
d)
the MPS decreases.
34.
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
a)
$250 million.
b)
$100 million.
c)
$10 million.
d)
$625 million.
35.

The quantity of Chinese exports is determined by

a)

Chinese aggregate expenditure.

b)

political factors.

c)

aggregate incomes in the rest of the world.

d)

Chinese GDP.

e)

Chinese consumption expenditure.

36.
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
a)
decrease.
b)
increase.
c)
decrease initially, then increase.
d)
not change.
37.
What would be the effect of an increase in imports?
a)
Increase AD
b)
Decrease AD
c)
Increase SRAS
d)
Decrease SRAS
38.
Which of the following would shift AS in the short run but not in the long run?
a)
Increase in capital stock
b)
Increase in wages
c)
Decrease in capital stock
d)
Improvements in technology
39.

In 2016, disposable income equaled $10 billion. If the MPC is 0.6, how much income was spent by consumers?

a)

$10 billion

b)

$4 billion

c)

$6 billion

d)

$8 billion

40.

In 2016, disposable income equaled $10 billion. If the MPC is 0.6, how much income was saved by consumers?

a)

$10 billion

b)

$4 billion

c)

$6 billion

d)

$8 billion

41.

The slope of the consumption function is

a)

equal to the MPC and is equal to 1.

b)

equal to the MPC and is less than 1.

c)

not equal to the MPC and is less than 1.

d)

equal to the MPC and is greater than 1.

e)

not equal to the MPC and is equal to 1.

42.

In an economy with no income taxes or imports, if the expenditure multiplier is 4, what does the MPC equal?

a)

.4

b)

.9

c)

.5

d)

.75

e)

.8

43.

The expenditure multiplier is 10 and, as a result of a change in expenditure, equilibrium expenditure and real GDP change by $100 billion. What was the initial change in expenditure?

a)

$10 billion

b)

$5 billion

c)

$20 billion

d)

$50 billion

e)

$100 billion

44.

An economy has no imports or income taxes. The MPC is .75 and real GDP is $120 billion. Businesses increase investment by $4 billion. The new level of real GDP is

a)

$132 billion.

b)

$124 billion.

c)

$140 billion.

d)

$136 billion.

e)

$128 billion.

45.

The MPC is 0.80 and there are no income taxes or imports. If government expenditures on goods and services increases by $5.0 billion, after the multiplier effect works out, aggregate expenditures increases by

a)

$2 billion.

b)

$20 billion.

c)

$10 billion.

d)

$2.8 billion.

e)

$1.8 billion.

46.

The formula, 1/1-slope of the AE curve, is the

a)

marginal propensity to export.

b)

total amount of autonomous expenditure.

c)

marginal propensity to consume.

d)

marginal tax rate.

e)

expenditure multiplier.

Similar Resources on Wayground

Global 10 Review

42 questions

Global 10 Review

quiz

Worksheet

•

9th - 12th Grade

World History Final Review

50 questions

World History Final Review

quiz

Worksheet

•

9th - 12th Grade

Canadian Democracy

50 questions

Canadian Democracy

quiz

Worksheet

•

12th Grade

STAAR BENCHMARK: Revolution to Constitution

50 questions

STAAR BENCHMARK: Revolution to Constitution

quiz

Worksheet

•

8th - 12th Grade

History & Theories Reading Quiz ReTake

47 questions

History & Theories Reading Quiz ReTake

quiz

Worksheet

•

11th - 12th Grade

Soal PAS 1 IPS KELAS 8

50 questions

Soal PAS 1 IPS KELAS 8

quiz

Worksheet

•

12th Grade

Unit 10 - Kennedy-Johnson Quizizz

51 questions

Unit 10 - Kennedy-Johnson Quizizz

quiz

Worksheet

•

9th - 12th Grade

SOAL-SOAL TEORI EKONOMI MIKRO AKL 7

50 questions

SOAL-SOAL TEORI EKONOMI MIKRO AKL 7

quiz

Worksheet

•

12th Grade