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# If equilibrium income is \$400 billion, MPC = 0.9, and autonomous investment increases \$40

If equilibrium income is \$400 billion, MPC = 0.9, and autonomous investment increases \$40 billion, equilibrium income will be

A) \$440 billion.

B) \$360 billion.

C) \$600 billion.

D) \$800 billion.

92) Other things constant, if the MPS is 0.1, and private investment spending falls by \$100 million, then national income

A) decreases by \$10 million.

B) increases by \$90 million.

C) decreases by \$1 billion.

D) increases by \$1 billion.

93) If an increase of \$5 billion in investment is associated with an increase of \$25 billion in income, the multiplier is

A) 1.

B) 3.

C) 5.

D) 7.

94) If the MPC is 0.9, the multiplier for a change in autonomous spending is

A) 0.1.

B) 9.

C) 10.

D) 100.

95) A decrease in autonomous investment of \$100 that occurs when MPS = 0.25 will lead to a decrease in national income of

A) \$25.

B) \$100.

C) \$400.

D) \$800.

96) The multiplier is the ratio of the

A) change in the equilibrium level of real national income to the change in autonomous expenditures.

B) equilibrium level of real national income to the change in induced expenditures.

C) change in induced expenditures to the change in autonomous expenditures.

D) change in autonomous expenditures to the change in the equilibrium level of real national income.

97) A permanent reduction in investment spending leads to

A) a more than proportional increase in real national income.

B) a more than proportional decrease in real national income.

C) a less than proportional decrease in real national income.

D) a proportional decrease in real national income.

98) An increase in net exports leads to an increase in real national income. Further,

A) consumption spending and saving increase.

B) consumption spending increases but saving doesn&#39;t change.

C) consumption spending increases while investment spending decreases.

D) government spending decreases to offset the increase in net exports.

99) The expression 1/MPS is defined as

A) one minus the multiplier.

B) the inverse of the multiplier.

C) the multiplier.

D) autonomous consumption.

100) If the multiplier is 10, then the MPC is

A) 0.9.

B) 0.1.

C) 1.

D) 9.

Dec 07 2019 View more View Less Get Solution