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Given an MPC of .9, if aggregate expenditure equilibrium is

Paper help Economics Given an MPC of .9, if aggregate expenditure equilibrium is

Economics

Given an MPC of .9, if aggregate expenditure equilibrium is

Given an MPC of .9, if aggregate expenditure equilibrium is 690 billion and the… Show more Section 1 6.Given an MPC of .9, if aggregate expenditure equilibrium is 690 billion and the government increases its spending by 25 billion what will the new equilibrium level of aggregate expenditure be A) 690 billion B) 715 billion C) 940 billion D) 665 billion E) 1 trillion 025 billion 7. Using the information from question six, if government taxes are increased by 25 billion to cover the increase in government spending what will the new equilibrium level of GPD be. A) 940 billion B) 690 billion C) 715 billion D) 915 billion E) 665 billion 11. Which of the following is not a determinant of aggregate demand? A) Investment spending for new bottling machines B) Worker productivity declines by 5% C) Government purchase of golf balls D) A rise in the price of domestic oil E) Both choices B and D 12. A dramatic decrease in the real balance effect might be caused by what, and would do what to the aggregate demand curve. A) An increase in the real interest rate and cause the aggregate demand curve to shift out to the right B) A decrease in the nominal interest rate and cause the aggregate demand curve to shift in to the left C) A decrease in the price level and cause a downward movement along the aggregate demand curve D) An increase in the price level and cause an upward movement along the aggregate demand curve E) A decrease in the real interest rate and cause the aggregate demand curve to shift in to the left 13. Which one of the following is not a determinant of aggregate supply A) Due to unprecedented domestic oil spills domestic oil prices double B) Stock and bond prices double causing an increase in consumer confidence as well as consumption C) Conflict in other parts of the world reduce foreign oil output to half, thus increasing the cost of imported oil D) U.S. workers over the last year have increased their hourly output by 25% E) All of the above are determinant of aggregate supply 14. Assume the equilibrium level of GDP output is 510 billion and the price level is 100. If oil prices rise by 100% what will happen to the equilibrium level of GDP and the price level. A) Both will decline B) Both will increase C) The equilibrium level of GDP will decline but the equilibrium price level will rise D) The equilibrium level of GDP will increase but the equilibrium price level will decline E) The equilibrium price level will remain the same but the equilibrium level of GDP output will decline 18. The full employment level of GDP is 600 billion the current level of GDP is 700 billion the MPC is .8 by how much should the government change its spending so it can move the economy back to the full employment level of output. A) Decrease spending by 50 billion B) Increase spending by 25 billion C) Decrease spending by 20 billion D) Increase spending by 10 billion E) Decrease spending by 5 billion Section 2 6.Given a reserve ratio of 10% and $500,000 deposited in a checking account, the bank has currently leant out $250,000 of this and has purchased $100,000 in treasury bonds. If some one wants to take out another loan for $150,000 can the bank lend the money to them and still maintain their required reserve. A) Yes and the bank will still have $50,000 to make new loans with B) No if the bank makes the loan they will not have enough for the required reserve C) Yes and the bank will break even D) Yes the bank does not have to include $100,000 in treasury bonds in its accounting E) No the bank is required to purchase treasury bonds only at this point 7.Given a reserve ratio of 20% and $100,000 deposited in checking accounts, how much new M1 money will be created by the entire banking system through the process of loans and deposits. A) $100,000 B) Nothing C) $50,000 D) $250,000 E) $400,000 8.Given a reserve ratio of 20% if $40,000 Is deposited in checking accounts how much money will this bank be able to lend out. A) $32,000 B) $40,000 C) $48,000 D) $30,000 E) Nothing 9. From the previous question, if instead of making loans the bank decides to buy $20,000 worth of treasury bonds, how much money will the bank now have to lend out. A) $40,000 B) $32,000 C) $23,000 D) $12,000 E) Nothing 10.Using the information from the previous question if the bank now makes a loan of $10,000 will the bank be able to make any more additional loans. A) Yes the bank can lend another $10,000 B) Yes the bank can lend another $2000 C) Yes the bank can lend another $3000 D) No the bank has no more access reserves E) No the bank must use its remaining reserves to purchase treasury bonds • Show less

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