Suppose the government increases spending

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Reference no: EM131393441

1. Assume that M is $500 billion and V is 5. If there is a 10 percent increase in V, then, according to the monetarist equation, nominal GDP will be:

A. $2,550 billion

B. $2,650 billion

C. $2,750 billion

D. $2,850 billion

2. Suppose the government increases spending by $100 billion as a stimulus package. If the MPC is .6 the equilibrium income will:

a) decrease by 250 billion

b) increase by 250 billion

c) increase by 600 billion

d) decrease by 400 billion

Reference no: EM131393441

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