If the MPS is 0.25 and autonomous consumer spending increases by $75 billion, we would expect equilibrium income (Y) to: (show your work to the right)
A. increase by $75 billion.
B. increase by $300 billion.
C. decrease by $75 billion.
D. increase by roughly $100 billion.
E. None of the above
If the MPC is 0.80 and investment spending increases by $50 billion, we would expect equilibrium income (Y) to:
A. increase by $50 billion.
B. increase by $500 billion.
C. decrease by $50 billion.
D. increase by $250 billion.
E. None of the above
Suppose the government increases itâs spending by $100 billion as a stimulus package. If the MPC is 0.75, then equilibrium income will:
A. increase by $ 750 billion.
B. increase by $133.33 billion.
C. decrease by $600 billion.
D. increase by $400 billion.
If the MPC is 0.50 and government spending decreases by $150 billion, we would expect equilibrium income to:
A. decrease by $150 billion.
B. decrease by $300 billion.
C. increase by $75 billion.
D. decrease by $150 billion.
E. None of the above.