# Chapter 14 Aggregate Demand and Aggregate Supply

November 9, 2018

37)
The multiplier represents the ratio of the total shift in aggregate demand to
the
A)
total shift in short-run aggregate supply.
B)
initial shift in short-run aggregate supply.
C)
initial shift in aggregate demand.
D)
total shift in long-run aggregate supply.

38)
The marginal propensity to save (MPS) is the
A)
amount of saving that is later consumed.
B)
fraction of additional income that is saved.
C)
part of consumption spending that does not depend on income.
D)
total amount of income that is saved.

39)
If the government increases its purchases of goods and services by \$3,000 and
the MPC is 0.8, GDP and income will eventually increase by
A)
\$2,400.
B)
\$6,000.
C)
\$15,000.
D)
\$24,000.

40)
If the government decreases its purchases of goods and services by \$12,000 and
the MPS is 0.5, GDP and income will eventually decrease by
A)
\$2,400.
B)
\$6,000.
C)
\$24,000.
D)
\$60,000.

41)
If the government increased its purchases of goods and services by \$12,000, and
this resulted in an eventual increase in GDP and income of \$60,000, the MPS
would be equal to
A)
0.2.
B)
0.4.
C)
0.8.
D)
2.

42)
If the government decreased its purchases of goods and services by \$4,000, and
this resulted in an eventual decrease in GDP and income of \$10,000, the MPC
would be equal to
A)
2.5.
B)
1.5.
C)
0.6.
D)
0.4.

43)
If the MPC = 0.9, the multiplier would be
A)
0.1.
B)
2.
C)
9.
D)
10.

44)
If the MPS = 0.2, the multiplier would be
A)
0.5.
B)
1.
C)
2.
D)
5.

45)
If the multiplier = 2.5, the MPC would be
A)
0.25.
B)
0.4.
C)
0.6.
D)
0.75.

46)
If the multiplier = 2.5, the MPS would be
A)
0.25.
B)
0.4.
C)
0.6.
D)
0.75.

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