If the marginal propensity to consume is 0.7, the expenditure multiplier is

In the two-gap model, which of the following gaps, when binding, leads to foreign aid having the largest impact on GNP?

(a) Fiscal gap. (b) Savings gap. (c) Foreign exchange gap. (d) None of the above.

In 2014, a farmer grows and sells $3 million worth of corn to Big Flakes Cereal Company. Big Flakes Cereal Company produces $8 million worth of cereal in 2014, with sales to households during the year of $7 million. The unsold $1 million worth of cereal remains in Big Flake Cereal Company's inventory at the end of 2014 . The transactions just described contribute how much to GDP for 2014?

a. $3 million b. $7 million c. $8 million d. $11 million