Question

In a closed economy with a government, if Saving is greater than Investment then,

Question 41 options:

	consumpton must be less than saving
	saving must be less than consumption
	the government must be running a budget surplus
	the government must be running a budget deficit

As the public becomes nervous about the viability of many borowers, the Fed can alleviated some of the panic by:

Question 43 options:

	selling bonds to the public
	buying bonds from the public
	cuttng the money suppoy and raising interest rates
	spending on infrastructure

If the marginal propensity to consoume is .60 then,

Question 44 options:

	the marginal propensity to save is .40 and the multiplier is 1.67
	the marginal propensity to save is .40 and the multiplier is 2.5
	the marginal propensity to save is 2.5 and the multiplier is 4.0
	the marginal propensity to save is 1.67 and the multiplier is 4.0

A law requiring an annually balanced federal budget would tend to:  

Question 45 options:

	create inflation
	make recessions worse
	magnify the multiplier effect
	stabilize the economy

Answer 1

Q1. In a closed economy with a government, if Saving is greater than Investment then

Answer- (D) The government must be running a budget deficit.

Q2. As the public becomes nervous about the viability of many borowers, the Fed can alleviated some of the panic by:

Answer- (B) Buying bonds from the public.

Q3. If the marginal propensity to consoume is .60 then,

Answer- The marginal propensity to save is .40 and the multiplier is 2.5

     Note- MPC + MPS = 1

                        0.6 + MPS = 1

                                  MPS = 1 - 0.6

                                           = 0.4

                      Multiplier = 1 / MPS

                                    = 1 / 0.4

                                    = 2.5

Q3. A law requiring an annually balanced federal budget would tend to

Answer- (d) stabilize the economy