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Q7). The correct option is (a).
The increase in government spending would cause output to rise by even more than it would as a result of the increase in savings.
Increased government spending is likely to cause a rise in aggregate demand (AD). This can lead to higher growth in the short-term. Higher government spending will also have an impact on the supply-side of the economy – depending on which area of government spending is increased.
Q8). The correct option is (b).
the change in taxes multiplied by (−b/1 − b).
True.Q9). The correct option is
Says law is one of the classical model,which holds that "supply creates its own demand". Whatever the supply came in the market finds its demand in market as well.
Q10). The correct option is (b).
When the interest rate is low, investment spending increases.
As we know, when the rate of interest is low the investment spending will increase and this in turn will increase the aggregate expenditure spending in the economyy.
Q11). The correct option is
True.
As per the given details, MPS = 1- PC = 1-.85 = .16 It means that of each $ income, $.15 is saved.
Hope you got the answer.
Thanks!