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True or False
1. If national income increases by S80 million and consumption increases by S20 million, the marginapropensity to consume is 4.
2. When potential GDP increases, short-run aggregate supply also increases, but long-run aggregate supply does not change.
3. The 'quantity theory of money' argues that an increase in the money supply at a rate that is faster than therate of increase in real GDP will lead to a decrease in the price level in the long run.
4. The Reserve Bank of Australia engages in open market purchase of securities when it wants to decreaseinterest rates.
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How did the economy that existed at the time of these theories influence them? Which theory is more appropriate for the economy today? Why?
Compute the average growth rate for each country over that period. What are some of the differences between those countries?
If the current GDP has declined or expanded over the past 2 quarters at least
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