What is the formula for the simple expenditure multiplier in a closed economy with no government or foreign trade?

MM-1A

Quiz
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Social Studies
•
University
•
Easy

Wynne Hom
Used 7+ times
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10 questions
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1.
MULTIPLE CHOICE QUESTION
45 sec • 1 pt
1 / (1 - MPC)
1 / (MPC)
1 - MPC
1 / (MPS)
2.
MULTIPLE CHOICE QUESTION
45 sec • 1 pt
If the marginal propensity to consume (MPC) is 0.8, what is the value of the expenditure multiplier?
4
5
2
1.25
3.
MULTIPLE CHOICE QUESTION
45 sec • 1 pt
Which of the following would increase the value of the expenditure multiplier?
An increase in taxes
A decrease in the MPC
An increase in the MPC
An increase in imports
4.
MULTIPLE CHOICE QUESTION
45 sec • 1 pt
When MPC = 0.6, how much would total spending increase if autonomous spending increases by $100?
$150
$250
$400
$500
5.
MULTIPLE CHOICE QUESTION
45 sec • 1 pt
If the expenditure multiplier is 4, which of the following is the MPC?
0.2
0.25
0.5
0.75
6.
MULTIPLE CHOICE QUESTION
45 sec • 1 pt
Why does the expenditure multiplier occur in an economy?
Because changes in aggregate demand directly change output.
Because initial spending leads to multiple rounds of spending.
Because changes in government spending impact only GDP.
Because inflation remains constant.
7.
MULTIPLE CHOICE QUESTION
45 sec • 1 pt
If MPC = 0.9, and investment spending increases by $200 million, what is the total increase in GDP?
$1,000 million
$900 million
$2,000 million
$1,800 million
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