Homework Answers
1)
Answer: (a)
Increasing marginal propensity to consume (MPC). So here, value of multiplier will rise. Therefore increase in government expenditure will have larger impact on the aggregate demand.
2)
Answer: (a)
There will be a rise in aggregate demand. firm will be making more investment in productive activities. Therefore Central Bank can decrease the aggregate demand why decreasing the money supply and raising the level of interest rate.
3)
Answer: true statement
Increase in rate of interest causes a decrease in demand for the money.
4)
Answer:(c)
The rate of interest is the main factor that establish the equilibrium in the money market
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An increase in the marginal propensity to consume Select one: a increases the multiplier, so that...
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