b. 2 c. 5 d. 4 44. If MPS is 0.2, then the multiplier is a. 8 b. 2 c. 4 d. 5 45.
ID: 1122041 • Letter: B
Question
b. 2 c. 5 d. 4 44. If MPS is 0.2, then the multiplier is a. 8 b. 2 c. 4 d. 5 45. IM the MPS is 0.2 and a component of AD, such as Investment, is increased by $10, then the maximum amount of change in income and output for the nation would be a. $2 b. $20 c. $50 d $100 46. If the MPC is 0.8 and a component of AD, such as Investment, is increased by $5, thven the maximum amount of change in income and output for the nation would be a. $20 b. $25 c. $50 d. $100 47. Which of the following is NOT a function of money? A. Medium of Exchange. B. Hyper Inflation C. Unit of Account. D. Store of Value. 48. Which of the following is NOT a liquid asset: A. Cash in the hand of the public. B. Checkable Account C. Traveler's Check D. Money Market Mutual Fund. 49. What problem did trade by barter transactions pose? A. Double Coincidence of Wants. B. Medium of Exchange. C. Unit of Account. D. Store of Value 50. What are the options of fiscal policy? A. Taxes B. Government Spending C. Combination of both D. All of the Above.Explanation / Answer
44. d) 5
The multiplier process will be greater as less saving is induced in case the MPS is smaller, therefore if MPS = 0.2 then the multipler will be 5
45.$100
46.b)$25
47.b) hyper inflation
Four functions of money are exchange value, store value, unit of account and standard of deferred payment, inflation cannot be a function of money.
48.c) Traveller's Check
Travellers check is used in place of a hard cash usually by the travellers who are travelling to other countries. It cannot be a liquid asset.
49.c) unit of account
In barter transactions there is no common unit of value or measure. It differs from country to country.
50. d) All of the above
The main aim of fiscal policy is to bring a balance between taxes and government spending, so all of the above will be an appropriate answer.
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