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Questions › JNU › JNU SSS 2013 › Q30
1 mark, −0.25Macroeconomics › Keynesian cross and the multiplier › Government spending and tax multipliersEasyabout 1 min

JNU SSS 2013 Question 30: Keynesian cross and the multiplier

Consider an economy in which the consumption function is given by C=400+0⋅6(Y−T)C = 400 + 0{\cdot}6(Y - T)C=400+0⋅6(Y−T). Investment (I)(I)(I) is 120, government purchases (G)(G)(G) and taxes (T)(T)(T) are both 100.

The government expenditure multiplier is

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Plain-text version

Consider an economy in which the consumption function is given by C = 400 + 0·6(Y - T). Investment (I) is 120, government purchases (G) and taxes (T) are both 100. The government expenditure multiplier is (A) 2·5 (B) 3·5 (C) 4·5 (D) 1

Also written as: Consider an economy in which the consumption function is given by C = 400 + 0*6(Y - T). Investment (I) is 120, government purchases (G) and taxes (T) are both 100. The government expenditure multiplier is

Keynesian cross and the multiplier has come up 167 times in 7 exams since 2006.

What this question tests

This question is on Government spending and tax multipliers, part of Keynesian cross and the multiplier in Macroeconomics.

The effect on income of changes in government spending, lump-sum taxes, transfers and income taxes.

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Question from the JNU SSS 2013 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.