Given that the marginal propensity to consume in a fully employed closed economy is 0.75, an increase in government expenditure of $1,000 million will increase the national income by: a. $0 b. $750 c. $4,000 d. $7,500 e. $8,000

- If an economy is in equilibrium when national income is $1000, and the level of autonomous expenditure is $600, what is the value of the marginal propensity to withdraw?     - Imagine an economy where autonomous expenditure is $50, and the equilibrium level of national income is $125. How much would autonomous expenditure have to increase by to achieve full employment output of $150 ?

Other things remain unchanged, a country's Aggregate Demand is made up of $100 billion of consumption, $40 billion of investment, $10 billion of net exports, and $20 billion of government purchases. Full-employment GDP is $200 billion. To obtain full employment under these conditions, the government should: Select one: a.increasing corporate income taxes to discourage private domestic investment. b.reduce tax rates and/or increase government spending. c.increasing interest rate on government bonds to encourage personal saving.

1. If equilibrium national income is higher than the potential income at full- employment, there will be in the economy a.deflationary gap b.recessionary gap c.inflationary gap d. inequality gap