In the simple Keynesian model, which of the following statements is false? Group of answer choices An increase in the marginal propensity to save will reduce the level of income in the economy. The reduction in output from an increase in taxation is larger the smaller is the marginal propensity to consume. An increase in lump sum taxation accompanied by an increase in government spending of the same size will increase output. The equilibrium level of output does not depend upon the size of the money multiplier.

In the Keynesian income-expenditure model which includes both a government sector and an external sector, an increase in autonomous consumption, government expenditure or investment combined with an increase in the marginal tax rateGroup of answer choiceswould increase the multiplier and reduce net exports, assuming the multiplier remains greater than onewould lead to a higher equilibrium level of income and an unchanged level of net exports while the multiplier would be reducedwould lead to an increase in net exports, assuming that the multiplier remains greater than onewould reduce the multiplier but, assuming this remains greater than one, equilibrium income would rise and net exports would fall.

According to the “paradox of thrift”, for the simple Keynesian income-expenditure model where there is no government or external sector,Group of answer choicesthe equilibrium level of income will be increased as a result of an increase in the proportion of income which households wish to save, although aggregate saving will not increasejust as with an individual who increases the proportion of income they save, if all individuals do this aggregate saving will increasean increase in the proportion of income which individuals wish to save, without a change in the marginal propensity to consume will decrease the size of the income-expenditure multiplierin the aggregate an increase in the proportion of income which households wish to save will not increase aggregate saving if the level of investment is unchanged.

Consider a Keynesian model with consumption functionC = 100 + c(Y – T),              0<c<1where taxes T are given byT = 100 + tY,                   0<t<1 with marginal tax rate t. An increase in G will increase equilibrium output by the multiplierGroup of answer choices1/(1 – c – c*t)1/(1 – c + c*t)1/(1 – c*t)1/(1 – c)

In the basic Keynesian model, all statements below except for one are true. Which is the incorrect statement? Group of answer choicesPlanned aggregate expenditure is always equal to output in equilibrium. Planned government spending always equals actual government spending.Planned net exports always equal actual net exports.Planned investment always equals actual investment.Planned consumption always equals actual consumption.

In the Keynesian income-expenditure model, equilibrium income is necessarily equal to a multiple ofGroup of answer choicesthe autonomous component of consumption, regardless of whether the economy is closed or openthe exogenous component of planned aggregate expenditurethe marginal propensity to consume minus the sum of the marginal tax rate and marginal propensity to importnone of the other alternatives are correct.