QUESTION 23
Pete owns a Pizza restaurant. Pete sells a pizza to a customer for $20. To make a pizza, Pete must buy $5 worth of ingredients, pay $7 to his workers, and pay $4 for his equipment and building. For each pizza sold to a customer, how much is added to GDP: $20, $16, $36, or $4?
QUESTION 24
Suppose that consumers spend 3/4 of each extra dollar of income they get, or in other words, the marginal propensity to consume is 3/4. If government spending increases by 400 billion dollars, we expect GDP to increase by: 800 billion dollars, 1,600 billion dollars, 200 billion dollars, or 300 billion dollars.