17. An increase in aggregate demand will tend to cause which of the following?

A. a recessionary gap

B. cost-push inflation

C. a deflationary gap

D. none of the above

18. What can we say about APC + APS and MPC + MPS?

A. APC + APS = 100% of the change in income.

B. MPC + MPS always equals 1, but the sum of APC + APS can vary.

C. MPC + MPS = 100% of total income.

D. Each must sum to 1.

19. Suppose that the marginal propensity to save (MPS) equals 0.4. The value of the multiplier would be

A.2.5.

B.0.25.

C.0.4.

D.4.

20. Suppose the marginal propensity to consume (MPC) equals 0.80, an increase in autonomous investment of $200 will lead to an increase in real Gross Domestic Product (GDP) by

A. $1,000.

B. $800.

C. $400.

D. $500.