Consider the following setup for problems #16-#20: C = 1000 + 0.7(Y - T), I = 40

ID: 1242722 • Letter: C

Question

Consider the following setup for problems #16-#20:

C = 1000 + 0.7(Y - T), I = 400, NX = 300 - 0.2Y, G = 1000

#16.) What are the marginal propensities to consume and to import, respectively?

a. 0.3 and 0.1

b. 0.3 and -0.1

c. 0.7 and 0.2

d. 0.7 and -0.2

e. not enough information.

#17.) Suppose taxes are 1000, then what is the level of equilibrium real GDP?

a. 1,000

b. 2,000

c. 4,000

d. 10,000

e. 20,000

#18.) If taxes are 1000, then what is the level of consumption at equilibrium real GDP?

a. 7,300

b. 3,100

c. 500

d. 300

e. -500

#19.) How large is the multiplier for a change in taxes?

a. -10.0

b. -5.0

c. -2.3

d. -2.0

e. -1.4

#20.) If government purchases increase by 100, then

a. the aggregate expenditure line shifts up by 70, and equilibrium real GDP increases by 140.

b. the aggregate expenditure line shifts up by 70, and equilibrium real GDP increases by 200.

c. the aggregate expenditure line shifts up by 100, and equilibrium real GDP increases by 140.

d. the aggregate expenditure line shifts up by 100, and equilibrium real GDP increases by 200.

c c b e b