Answer the following statements true (T) or false (F)
1) If the MPC is .8 in a private closed economy, a $30 billion increase in planned investment will
increase equilibrium real GDP by $120 billion.
2) Actual investment consists of planned investment plus unplanned changes in inventories (plus
or minus).
3) A $20 billion decrease in investment in a private closed economy that has an MPS of .5 will
reduce saving by $10 billion once the multiplier process has ended.
4) Exports are added to, and imports are subtracted from, aggregate expenditures in moving
from a closed to an open economy.
1) F
2) T
3) F
4) T
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A) she will not accept any offer made by Jack B) Jack should make the lowest possible offer to Jill C) she will accept the offer when Jack offers $25 D) Jack should not play the game
Which of the following is an example of expansionary monetary policy?
A) Congress passing a new government stimulus package. B) The Fed raising the discount rate for member banks. C) The Fed increasing the money supply to push interest rates lower. D) The president signing an executive order to raise the minimum wage of government employees.