15. To eliminate an AD shortfall of $120 billion when the economy has an MPC of

Question

15. To eliminate an AD shortfall of $120 billion when the economy has an MPC of 0,85 and MPI of 0.10, the government should decrease taxes by: A) $400 billion. B) S120 billion. C) S30 billion. D) $40 billion. 16. To el iminate an AD shortfall of S100 billion when the economy has an MPC of 0.90 and MPI of 0.10, the government should increase transfer payments by: A) $25 billion. B) S100 billion C) $80 billion. D) S20 billion. 17. Assume the MPC is 0.85 and MPI is 0.10, taxes increase by $100 billion, and government spending increases by $100 billion. Aggregate demand will: A) Increase by $400 billion B) Decrease by $400 billion. C) D) Increase by $100 billion. Not change 18. Suppose the government decides to increase taxes by ss0 billion and to increase transfer payments by $50 billion. What effect would there be on aggregate demand? A) Zero. B) S50 billion increase. C) More than $50 billion increase after the multiplier effect. D) $50 billion decrease. 19. Suppose the MPS is 0.1 and the MPI is 0.1. If the government stimulates the economy with $200 billion in increased transfer payments, aggregate expenditure would rise by: A) $200 billion. B) $400 billion. C) $800 billion. D) S1,000 billion. Use the following to answer questions 20-23 Figure 11.2 AS PE AD2 ADI QE QF REAL GDP According to Figure 11.2, a shift from ADi to AD2 will: A) Move equilibrium to QF B) Eliminate the GDP gap because of the increase in output. C) Move equilibrium to point Y because of an increase in the price level. D) Move the economy to point Y and then the market mechanism will move the economy to point Z 20.

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Can answer only four questions according to chegg policy. Please send other parts as separate question

20 answer C

21 B

22 D

23 D

24 C

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