Question: True or False: 1. The multiplier would be smaller if the marginal propensity to consume were smaller. 2. If the MPC were equal to two-thirds,

True or False:
1. The multiplier would be smaller if the marginal propensity to consume were smaller.
2. If the MPC were equal to two-thirds, the multiplier would be equal to 3.
3. The multiplier may be written as 1/(1 – MPC) or as 1/MPS.
4. A person's MPC and MPS can be equal only if MPC = 0.5.
5. The multiplier effect of a reduction in taxes is larger than the multiplier effect of an equal increase in government spending on goods and services.
6. If MPC = 0.67, the effects of a change in taxes on AD would be two-thirds the magnitude of the effects of an equal change in government spending.
7. The effect of a $5 billion change in government spending on AD would be greater than that of an equal change in taxes, regardless of the MPC.
8. The multiplier process is virtually instantaneous.

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