When income rises, total expenditures remain constant.

The definition of efficiency implies that production is carried out on the production possibilities frontier

a. True b. False Indicate whether the statement is true or false

If the MPC is 5/6 then the multiplier is

a. 6/5, so a $200 increase in government spending increases aggregate demand by $240. b. 5, so a $200 increase in government spending increases aggregate supply by $1000. c. 6, so a $200 increase in government spending increases aggregate demand by $1200. d. 6/5, so a $200 increase in government spending increases aggregate supply by $1200.