Determine new equilibrium level of aggregate expenditure

Reference no: EM1368556

31. If income is $900, saving is $20, and then income increases to $1000, and consumption is $975, what will the marginal propensity to consume be?

a) non
b) .95
c) .65
d) 1.25
e) .90

34. Given an MPC of .8, if the C + I equilibrium level of aggregate expenditure is $600 billion, then government spending of $50 billion is included, what will the new equilibrium level of aggregate expenditure be?

a) 600
b)1000
c) 850
d) 800
e) 560

35. Using the info from the question #34 above, if government taxes are increased by $50 billion to cover the increase in government spending what will the new equilibrium level of aggregate expenditure be?

a) 600
b) 650
c) 550
d) 810
e) 1020

40. Given an MPC of .9, if the equilibrium level of aggregate expenditure is $800 billion and there is a reduction in consumption of $5 billion what will the new equilibrium level of aggregate expenditure be?

a) 800
b) 580
c) 750
d) 850
e) 681

Reference no: EM1368556

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