Question 1
What is meant by multiplier (k)?
A.
Spending not caused by current Y (e.g. ΔG). B.
Fall in spending causes larger fall in Y. C.
Final change in national income ÷ initial injection. D.
Extra consumption per extra £ of income.
Question 2
Higher marginal propensity to import:
A.
Eliminates tax B.
Increases the multiplier C.
Reduces the multiplier D.
Has no effect
Question 3
MPW equals:
A.
X − M B.
MPS + MPT + MPM C.
MPC + MPS only D.
C + I + G
Question 4
What is meant by spare capacity?
A.
Keynesian: larger multiplier when below Yfe. B.
Spending not caused by current Y (e.g. ΔG). C.
Final change in national income ÷ initial injection. D.
Smaller leakages → larger multiplier.
Question 5
If MPW = 0.5, the multiplier is:
A.
1 B.
0.5 C.
5 D.
2
Question 6
What is meant by mpt?
A.
Extra consumption per extra £ of income. B.
Spending not caused by current Y (e.g. ΔG). C.
Extra tax per extra £ of income. D.
Extra imports per extra £ of income.
Question 7
A £10m injection with k = 2 raises national income by:
A.
£2m B.
£5m C.
£20m D.
£10m
Question 8
What is meant by mpm?
A.
Extra imports per extra £ of income. B.
Marginal propensity to withdraw = MPS + MPT + MPM. C.
Smaller leakages → larger multiplier. D.
Extra consumption per extra £ of income.
Question 9
What is meant by mpc?
A.
Extra consumption per extra £ of income. B.
Extra tax per extra £ of income. C.
Final change in national income ÷ initial injection. D.
Extra imports per extra £ of income.
Question 10
What is meant by k = 1 ÷ mpw?
A.
Extra imports per extra £ of income. B.
Spending not caused by current Y (e.g. ΔG). C.
Smaller leakages → larger multiplier. D.
Final change in national income ÷ initial injection.
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