Exam 24: The Algebra of Demand-Side Equilibrium

If equilibrium real GDP demanded rises from $4 trillion to $6 trillion when government purchases increase by $1 trillion,how large is the marginal propensity to consume?

The introduction of a $100 autonomous net tax in an economy with an MPC equal to 0.7 will,at each level of real GDP,

Which of the following statements best explains the effects of transfer payments and taxes on aggregate spending?

Government purchases are assumed to be autonomous because they are

If the MPC = 0.6 and government purchases increase by $2 trillion,then equilibrium real GDP demanded

If the government decreases net autonomous taxes by $100 billion and the MPC = 0.75,then equilibrium real GDP demanded will

In which of the following ways does government affect the consumption component of planned aggregate expenditures?

Exhibit 11-5 -In an economy characterized by the aggregate expenditure line in Exhibit 11-5,how would a $100 decrease in autonomous net taxes impact real GDP?

A $200 increase in government purchases has the same effect on the equilibrium level of real GDP as a $200 decrease in autonomous net taxes would.

Which of the following is a component of aggregate demand?

The simple tax multiplier is

Of the following fiscal programs,which has the smallest effect,per dollar,on aggregate demand?

The introduction of a $100 autonomous net tax in an economy with an MPC equal to 0.8 will,at each level of real GDP,

If autonomous net taxes increase by $200 billion and the MPC equals 0.75,equilibrium income will

The simple tax multiplier must always be smaller than the simple spending multiplier,regardless of the value of the MPC.

Exhibit 11-5 -In an economy characterized by the aggregate expenditure line in Exhibit 11-5,what would the equilibrium real GDP be equal to if autonomous government spending increased by $100?

If the government increases its purchases by $100 and the multiplier is 4,then equilibrium real GDP demanded

The formula for the multiplier that results from a change in autonomous net taxes is

The introduction of an autonomous net tax will

A $100 increase in government purchases will have exactly the same effect on equilibrium real GDP as a $125 decrease in autonomous net taxes when the MPC equals 0.8.