3. 6 , 2

In a closed economy with only lump-sum taxation, if the marginal propensity to consume is equal to 0.5, a $70 billion increase in government spending could cause a maximum increase in output of a. $52.5 billion b. $70 billion c. $140 billion d. $210 billion e. $280 billion

c. $140 billion

A technology boom improves technology across industries causing companies to invest, improving their productivity. a. Decrease aggregate supply but not change aggregate demand b. Decrease aggregate supply and decrease aggregate demand c. Increase aggregate demand and increase aggregate supply d. Increase aggregate demand but not change aggregate supply

c. Increase aggregate demand and increase aggregate supply

A decrease in business taxes will tend to: a. Increase aggregate demand but not change aggregate supply b. Increase aggregate demand and increase aggregate supply c. Increase aggregate supply but not change aggregate demand d. Decrease aggregate supply and decrease aggregate demand

c. Increase aggregate supply but not change aggregate demand

When the general price level in our economy increases, the following effects occur except: a. Our net exports will tend to decrease b. The interest rate will also tend to increase c. Foreign buyers will buy less of our output, and we tend to import more d. The purchasing power of people's savings will increase

d. The purchasing power of people's savings will increase