# Assume that the marginal propensity to consume is equal to 0.85. If the government increased spending

Assume that the marginal propensity to consume is equal to 0.85. If the government increased spending
by \$Z, and the real GDP increased by \$5000, what is the value of Z?
A)\$750
B)\$1000
C)\$900
D)\$800
Calculate the multiplier if the marginal propensity to consume (MPC) is equal to 0.99.
A)10000
B)1000
C)500
D)100
Suppose the government increases spending by \$100, as a result real GDP will:
A)increase by less than \$100.
B)increase by more than \$100.
C)increase by \$ 100.
D)none of the above.
If the marginal propensity to consume (MPC)Ã¯Â»Â¿ is equal to 0.74, then the marginal propensity to save (MPS) is equal to:
A)0.25
B)0.26
C)0.2
D)0.1
Suppose the government increased spending by \$100, and as a result real GDP increased by \$2000. Calculate the marginal propensity to consume (MPC).
A)0.95.
B)0.9.
C)0.8.
D)0.7

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