Example, in the economics of Jean-Baptiste Say). 4.The marginal propensity to consume is the change in consumption expenditure divided by the change in disposable income. 5.If the MPC is 0.8, the marginal propensity to save will be 0.4. 6.In a Keynesian macroeconomic model, private savings will equal the sum of private investment, the government budget deficit, and the international current account surplus. 7. When the economy is in Keynesian macroeconomic equilibrium, planned investment is equal to actual investment. 8.The larger the MPS, the smaller the Keynesian government spending multiplier. 9.If the MPC is 0.75, the Keynesian government spending multiplier will be 4/3; that is, an increase of $ 300 billion in government spending will lead to an increase in GDP of $ 400 billion. 10. If the MPC is 0.75, the lump-sum tax multiplier will be -4, that is, an increase in taxes of $ 100 "answers"

4.The marginal propensity to consume is the change in consumption expenditure divided by the change in disposable income.

  FALSE     Is related to the change in income not disposable income.

5.If the MPC is 0.8, the marginal propensity to save will be 0.4.

  FALSE   As person can either consume or saved this two should add to 1

6.In a Keynesian macroeconomic model, private savings will equal the sum of private investment, the government budget deficit, and the international current account surplus.

  TRUE     The current account surplus

Savings  =  Investment + Budget deficit + net exports

The net exports cover the budget deficit

7. When the economy is in Keynesian macroeconomic equilibrium, planned investment is equal to actual investment.

  TRUE   There is no unplanned investment for unsold goods

8.The larger the MPS, the smaller the Keynesian government spending multiplier.

  FALSE  

The formula for the multiplier is:

1 / (1 - marginal propensity to consume) =

1 / Marginal propensity to save

Asthe MPS increases it gets closer to 1 thus, decreasing the multiplier

9.If the MPC is 0.75, the Keynesian government spending multiplier will be 4/3; that is, an increase of $ 300 billion in government spending will lead to an increase in GDP of $ 400 billion.

 FALSE  1/(1-0.75) = 1/0.25 = 4

300 X 4 = 1,200 BILLONS

10. If the MPC is 0.75, the lump-sum tax multiplier will be -4, that is, an increase in taxes of $ 100billion will lead to a drop in GDP of  $ 400 billion

   FALSE    

The tax multiplier is -MPC / (1 - MPC)

-0.75 / (1 - 0.75) = -0.75 / 0.25 = -3

Then 100 x -3 = -300 billon decrease

Explanation:

fractionally backed paper money

fiat money

paper money

metallic money