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If the marginal propensity to consume (MPC) is0.80, the value of the spending multiplier is a. 2.b. 5.c. 8.d. 10.

If the value of the marginal propensity to consume (MPC) is 0.50, the value of the spending multiplier is a. .50.b. 1.c. 2.d. 5.

If the equilibrium level of real GDP is $100,000 below the full-employment level of real GDP and the spending multiplier is 4, how much of an increase in autonomous aggregate expenditures (such as government spending) is required to move the equilibrium to the full-employment level of real GDP? a. $400,000.b. $200,000.c. $100,000.d. $25,000.e. $10,000.

Keynes’ criticism of the classical theory was thatthe Great Depression would not correct itself. The multiplier effect would restore an economy to fullemployment if a. government would follow a “least government is the best government” policy.b. government taxes were increased.c. government spending were increased.d. government spending were decreased.

If the marginal propensity to consume (MPC) is 0.90, a $100 billion increase in planned investment expenditure, other things being equal, will cause an increase in equilibrium output of a. $90 billion.b. $100 billion.c. $900 billion.d. $1,000 billion.

According to classical macroeconomic theory, if real GDP is at the full-employment level, then an increase in aggregate demand will result in which of the following changes in equilibrium?a. Real GDP will rise, but the price level will remain constant.b. Real GDP and the price level will both rise.c. Real GDP will remain unchanged but

According to Keynesian theory, if equilibrium real GDP is below the full-employment level, then an increase in aggregate demand will result in which of the following changes in equilibrium? a. Real GDP will rise, but the price level will remain constant.b. Real GDP and the price level will both rise.c. Real GDP will remain unchanged

When the supply of credit is fixed, an increase in the price level stimulates the demand for credit, which, in turn, reduces consumption and investment spending. This effect is called the a. real balance effect.b. interest-rate effect.c. net exports effect.d. substitution effect.

The aggregate demand curve is defined as a. the net national product.b. the sum of wages, rent, interest, and profits.c. the real GDP purchased at different possible price levels.d. the total dollar value of household expectations.

The net exports effect is the inverse relationship between net exports and the__________ of an economy. a. real GDPb. GDP deflatorc. price leveld. consumption spending