UNIT 3 Macroeconomics Key - Denton ISD

1 458 Advanced Placement Economics Teacher Resource Manual National Council on Economic Education,New York, 1nACTIVITY 21 AnswerKey UNITThe King took the treatiseand had it printed for every then ordered the old professorto make up a series ofquestions to see ifthe subjects understood the the questions on the professor s Econoland is the value ofthe tax multiplier ifthe MPC is 4 is the value ofthe government spending multiplier ifthe MPC is 3 is the tax multiplier ifthe MPS is could the multiplier be used to explain wide swings in income (which could be called busi-ness cycles) in Econoland? Small changes in expenditure are magnified by the multiplier numerical value for the investment and government spending multiplier increases as the(A) value ofthe marginal propensity to save decreases.

2 (B)value ofthe average propensity to consume increases.(C)value ofthe marginal propensity to consume decreases.(D)value ofthe marginal propensity to save increases.(E)value ofthe average propensity to consume government spending multiplier is 5 in Econoland,the value ofthe tax multiplier must be(A)5(B)4(C)1(D) 4(E) 5 Advanced Placement Economics Teacher Resource Manual National Council on Economic Education,New York, has the following values for income and this data to answer questions7,8 and government spending multiplier in Econoland is(A)3(B)4(C)5(D)10(E) is an increase in taxes of$200 in Econoland,the decrease in GDP will be(A)$100(B)$200(C)$400(D)$600(E)$ is an increase in government spending of$100 and an increase in taxes of$100 inEconoland,then the change in GDP will be(A)$50(B)$100(C)$200(D) $100(E)

3 $ do the people ofEconoland need to understand multipliers? Understanding multipliersallows people to understand the impact offiscal policy and changes in autonomous components ofconsumption,investment and government spending on total 1nACTIVITY 21 AnswerKey unit