National Income and Price Determination

The larger the MPC, the smaller the spending multiplier.

The larger the MPC, the larger the spending multiplier.

The relationship between the MPC and the size of the spending multiplier is indeterminate.

The MPC has no impact on the size of the spending multiplier.

Consumer spending may rapidly decline due to decreased money supply growth rates only.

Higher interest rates might slow down economic growth temporarily.

There might be an immediate increase in aggregate demand beyond potential output.

Employment levels could rise drastically due to lower production costs.

There would be no change in aggregate demand.

It would increase by twice the amount of the tax increase.

It would decrease by twice the amount of the tax increase.

It would decrease by half the amount of the tax increase.

Import quantities would likely increase since foreign goods become cheaper in terms of the domestic currency.

Imports quantities would remain unchanged, given that exchange rate movements do not alter consumers' purchasing behavior.

Import quantities may increase even further if domestic consumers perceive foreign products as superior irrespective of cost.

Import quantities would decrease, as domestic consumers may switch to more expensive local products.

Devaluation of domestic currency against foreign currencies

Increased business investments

Mandatory reduction of stock market trading hours

High inflationary pressure on consumer goods

2

5

8

None of these answers are correct.

The effect on real GDP cannot be determined without knowing changes in specific components within $C$, $I$, or $NX$ sections of the $AD$ equation.

Real GDP should increase by exactly $100$ million.

Real GDP decreases, reflecting crowding out effects from higher interest rates due to increased borrowing needs.

Real GDP remains unchanged.

It fluctuates unpredictably

It increases

It remains constant

It decreases

Changes in spending do not affect overall output.

The marginal propensity to consume (MPC) is constant.

The marginal propensity to consume (MPC) is zero.

The economy is operating below its potential output.

Net exports are likely to decrease as domestic goods become relatively more expensive abroad.

Net exports may increase because domestic consumers find foreign goods less attractive price-wise.

Appreciation of the currency might encourage foreign investors, leading to an increase in net exports as they invest in domestic goods.

There will be no significant impact on net exports since exchange rates primarily affect financial markets rather than trade.