(A) income-price diagram.
(B) income-expenditures diagram.
(C) circular flow diagram.
(D) aggregate demand-aggregate supply diagram.
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The accelerator theory of investment says that induced investment is determined by?
(A) the rate of change of national income.
(B) expectations.
(C) the level of national income.
(D) the level of aggregate demand.
If injections are less than withdrawals at the full-employment level of national income, there is?
(A) an inflationary gap.
(B) equilibrium.
(C) a deflationary gap.
(D) hyperinflation.
According to the ‘paradox of thrift,’ increased efforts to save will cause?
(A) an increase in income and an increase in overall saving.
(B) a decrease in income and an overall decrease in saving.
(C) a decrease in income but an increase in saving.
(D) an increase in income but no overall change in saving.
Assume there is no government or foreign sector. If the MPC is .75, a Rs.20 billion decrease in planned investment will cause aggregate output to decrease by?
(A) Rs. 80 billion.
(B) Rs. 20 billion.
(C) Rs. 26.67 billion.
(D) Rs. 15 billion.
Assuming there is no foreign sector, if the multiplier is 3, and the net income tax rate is 20%, the MPC is?
(A) 3/4
(B) 4/5
(C) 5/6
(D) 6/7
Assuming the net income tax rate is 25% (and there is no foreign sector), if the MPC is 0.8, the multiplier is?
(A) 2.5.
(B) 8.
(C) 5.
(D) 2.
Assuming there are no taxes (and no foreign sector), if the MPC is .8, the multiplier is?
(A) 2.5.
(B) 8.
(C) 5.
(D) 2.