If the marginal propensity to consume (MPC) is 4/5, the value of the simple multiplier is:

If the marginal propensity to consume (MPC) is 4/5, the value of the simple multiplier is:
 a. 4.
 b. 1/5.
 c. 4/5.
  d. 5/4.
  e. 5.

QUESTION 2

In the long run, command-and-control (CAC) regulations encourage firms to develop new technology to lower future emissions.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 3

Suppose the required reserve ratio is 0.2, and the Fed buys 5,000 of U.S. government securities from Bank A, which lends 4,000 and keeps 1,000 in its vault as cash. In this round of the money-creation process, the M1 money supply has increased by:
 a. 1,000.
 b. 4,000.
 c. 5,000.
 d. 10,000.
  e. 3,000.

QUESTION 4

If investment increases by 100 and, as a result, gross domestic product (GDP) ultimately increases by 200, the multiplier equals _____.
 a. 1
  b. 2
  c. 3
  d. 4
  e. 5

QUESTION 5

Requiring cars in Chicago to reduce pollution by the same amount as cars in Topeka is efficient.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 6

Suppose the Fed sells 10 million in government securities to a commercial bank. If the required reserve ratio is 0.2, what is the maximum amount by which checkable deposits in the banking system can change?
 a. +10,000,000
  b. 10,000,000
  c. +50,000,000
  d. 50,000,000
  e. +20,000,000