Gce Model Questions Vol1 2017 Economics Question 24

Practice objective / multiple choice question 24 from the 2017 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2017 Economics Objective / Multiple Choice Medium Difficulty
Question 24 GCE_MODEL_QUESTIONS_VOL1 • 2017 • ECONOMICS • objective

In a closed economy, autonomous consumption is £200, marginal propensity to consume (MPC) is 0.75, investment is £150, government spending is £100, taxes are £80 and net exports are £30. (a) Calculate the equilibrium level of aggregate income using the Keynesian multiplier. (b) If government spending rises by £20, what is the new equilibrium income? (c) What is the total change in income resulting from this fiscal expansion?

Answer Options

Correct Answer A. Initial income £1,600; after increase £1,680; total change £80
B. Initial income £1,600; after increase £1,700; total change £100
C. Initial income £1,550; after increase £1,630; total change £80
D. Initial income £1,500; after increase £1,580; total change £80
Correct Answer
A
Correct Option:
Initial income £1,600; after increase £1,680; total change £80

About This Question

This is Gce Model Questions Vol1 2017 Economics Question 24. It is one of the objective questions from the 2017 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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