In a simple model with no government or foreign sector, a decline in investment of $10 billion will lead to a $50 billion decline in the equilibrium level of income if
A) the mps is 0.2
B) the mpc is 0.5
C) the ratio of total consumption to total income is 0.8
D) changes in consumption divided by changes in income equal 0.2
E) changes in saving divided by changes in income equal 0.8
Correct Answer:
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Q1: When calculating the multiplier for government purchases
Q2: The size of the expenditure multiplier depends
Q4: The size of the expenditure multiplier
A)changes with
Q5: The expenditure multiplier measures
A)the number of steps
Q6: If there is no government or foreign
Q7: The marginal propensity to consume (mpc)
A)shows the
Q8: In a model with no government or
Q9: The expenditure multiplier is used to calculate
Q10: Assume a model with no government, where
Q11: Assume a simple model without any government.If
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