Suppose the MPC in an economy is 0.9. The APC is initially 0.95 and disposable income is $4 billion. If disposable income increases to $14 billion, what is the new level of consumption?

Refer to Figure 17-1. Suppose that the economy is currently at point A. If the Federal Reserve engaged in contractionary monetary policy, where would the economy end up in the short run?

A) It would remain at point A. B) point B C) point C D) point D E) point E

Which of the following categories accounted for the largest percentage of total federal government expenditures in recent years?

a. National defense b. Education and health c. Income security d. Interest on the national debt