Chapter 11, Problem 1.4P

Sub-part

A

To determine

The impact of changes in real GDP demanded in case MPC is 0.9

Concept Introduction:

Government purchases: Government purchases are the tools of fiscal policy by which government increase or decrease the aggregate demand of the economy and control the macroeconomic indicators like inflation, unemployment, GDP growth rate.

Sub-Part

B

To determine

The impact of changes in real GDP demanded in case MPC is 0.8

Concept Introduction:

Government purchases: Government purchases are the tools of fiscal policy by which government increase or decrease the aggregate demand of the economy and control the macroeconomic indicators like inflation, unemployment, GDP growth rate.

Sub-Part

C

To determine

The impact of changes in real GDP demanded in case MPC is 0.75

Concept Introduction:

Government purchases: Government purchases are the tools of fiscal policy by which government increase or decrease the aggregate demand of the economy and control the macroeconomic indicators like inflation, unemployment, GDP growth rate.

Sub-Part

D

To determine

The impact of changes in real GDP demanded in case MPC is 0.6

Concept Introduction:

Government purchases: Government purchases are the tools of fiscal policy by which government increase or decrease the aggregate demand of the economy and control the macroeconomic indicators like inflation, unemployment, GDP growth rate.