Question

1. If there is a recessionary GDP gap of $800 billion and the MPC=0.8 how much should the government increase government spending (G) by to eliminate the gap?

Group of answer choices

$640 billion

$200 billion

$800 billion

$160 billion

2. If there is a recessionary GDP gap of $800 billion and the MPC=0.8 how much should the government decrease taxes (T) by to eliminate the gap?

Group of answer choices

$800 billion

$640 billion

$200 billion

$160 billion

3. If the MPC is 0.8, what is the Government Spending Multiplier?

Group of answer choices

10

.2

5

2

4. If the Government Spending Multiplier is 10 what is the MPC?

Group of answer choices

0.1

0.5

0.9

10

5. If the Required reserve ratio is 0.2 what is the Money Multiplier

Group of answer choices

0.98

5

2

20

Answer 1