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-the following information to answer Questions 19 and 20. An increase in consumption of S ince national equilibrium income by $25,000. Which of the following statements is correct A The MPC is 0.2 and the MPS is 03 B The MPC is 03 and the MPS is 07 C The MPC is 08 and the MPS is 02 The MPC is 0.5 and the MPS is 05 Assuming the new equilibrium income level is $100.000 and the level of full employment income is $150,000, there would be a: deflationary gap of S10,000 deflationary gap of $50,000 inflationary gap of $10,000 inflationary gap of $50,000 lain the differnece between demand-pull inflation and cost-pushinlaltion - AD/AS diagram to explain why an injection of demand is most appropiate when momy is suffering slow economic growth and cyclical unemployment Stain in words how a upturn in an economy is most likely to affect Governmen and spending lain in words how a downturn in an economy is most likely to affect governme - and spending

Answer 1

As per HOMEWORKLIB RULES first 2 questions are answered

Kindly ask rest of the questions in a separate post

19.

(A) MPC is 0.2 and MPS is 0.8

Reason: MPC = Change in C / Change in Y = 5000/25000 = 0.2

MPS = 1 – MPC = 1 – 0.2 = 0.8

20.

(B) Deflationary gap of $50,000

Reason: Deflationary gap = Full employment income – Equilibrium output

Deflationary gap = 150,000 – 100,000

Deflationary gap = 50,000