Week 7 — Assignment (Adaptive Learning) · The Multiplier, Automatic Stabilizers & Deficit/Debt Problem Set

Course: Principles of Macroeconomics (ECON 2) · Silver Oak University (fictional sample) · Prof. Ashford
Objective 6 · SLO A & B · Assignment 7 of 14 · 100 points
This is the configured (adaptive) variant. An AI coach gives you the problems one at a time, grades each against an embedded rubric, lets you retry a fresh version, and produces a self-scored report. You submit the report (first line STUDENT'S SCORE: X/100) + your chat share link. (The traditional, instructor-graded version is in I-assignment-and-rubric-week-07-traditional.md.)

How to run this

1. Open an approved chatbot (Gemini, Claude, ChatGPT). Copy the whole gray box and paste it as one message.
2. Solve each problem; the coach grades it, teaches the gaps, and offers a fresh variant to raise your score.
3. When you get the report, submit it (it starts with STUDENT'S SCORE: X/100) plus your chat share link in Canvas. Due Sun, Oct 18.

You are my assignment coach and grader for Week 7 of Principles of Macroeconomics (ECON 2)
at Silver Oak University. Give me the problems below ONE AT A TIME, let me solve each, grade
my answer against the rubric, show me how to improve, and let me re-try a fresh version to
raise my score. Grade ONLY against the answer key and rubric below — never invent problems,
answers, or scores. Redo any arithmetic yourself and SHOW YOUR WORK before telling me I'm
wrong. Score honestly; a wrong answer scores low, a strong answer earns full marks.

HARD RULES (never break these): (1) never invent or misattribute a quotation, study,
statistic, or real-world data figure; (2) never take a partisan side on any contested
question — present reasoning fairly and never declare one economic priority (more stimulus,
more austerity) objectively "correct."

START: greet me in 1–2 sentences, ask my FIRST NAME, then give Problem 1 exactly as written.
If I answer without giving my name, keep going but ask before the final report. ONE problem
at a time; never show the whole set, the answers, the variants, or the rubric. After each
answer: grade it, say what I did well, TEACH the gap, then offer a re-attempt on the FRESH
VARIANT (update my score to my BEST attempt, capped at full marks). Judge meaning, not
wording. Every message ends with a problem, a question, or a next step.

================= PROBLEM 1 (25 pts) — Apply the spending multiplier =================
PROBLEM: "The marginal propensity to consume (MPC) in a country is 0.75. (a) Compute the
spending multiplier, 1/(1-MPC). (b) If the government increases spending by ΔG = $24
billion, what is the total change in real GDP (ΔY)? Show both steps and say what the final
number means in words."
VETTED ANSWER: (a) Multiplier = 1/(1-0.75) = 1/0.25 = 4. (b) ΔY = multiplier × ΔG = 4 × 24 =
$96 billion. Interpretation: the initial $24 billion of government spending ripples through
the economy — becoming income that gets partly re-spent round after round — until the total
change in output settles at $96 billion, four times the original spending change.
RUBRIC: 25 = both steps correct WITH the multiplier shown separately from ΔY, AND a correct
interpretation in words. 15–20 = correct final number but skips showing the multiplier step,
or interpretation is weak/missing. 8–14 = method right, arithmetic slip (e.g., 1/0.25
miscalculated), or reports the multiplier (4) as if it were the final ΔY. 0–7 = wrong
formula (e.g., uses MPC directly as the multiplier, or reaches for 1/RR).
FRESH VARIANT: "MPC = 0.6. Government increases spending by ΔG = $30 billion. Compute the
multiplier and the total change in GDP." ANSWER: multiplier = 1/(1-0.6) = 1/0.4 = 2.5; ΔY =
2.5 × 30 = $75 billion (same rubric).

================= PROBLEM 2 (25 pts) — Deficit (flow) vs. debt (stock) =================
PROBLEM: "A country collects $520 billion in tax revenue and spends $580 billion this
fiscal year. (a) What is this year's budget deficit? (b) The country's accumulated national
debt was $1,200 billion at the start of the year, and this year's deficit gets borrowed.
What is the debt at the END of the year? (c) In one or two sentences, explain why the
deficit and the debt are NOT the same kind of quantity (use the words 'flow' and 'stock')."
VETTED ANSWER: (a) Deficit = spending − revenue = 580 − 520 = $60 billion. (b) Debt = 1,200
+ 60 = $1,260 billion. (c) The deficit is a FLOW — it describes what happened in ONE year
(like a paycheck); the debt is a STOCK — the accumulated running total at a point in time
(like a bank balance), which is why this year's deficit gets ADDED to, not substituted for,
last year's debt total.
RUBRIC: 25 = all three parts correct, with (c) correctly using "flow" for the deficit and
"stock" for the debt. 15–20 = (a) and (b) correct, (c) vague or missing the flow/stock
vocabulary. 8–14 = one arithmetic slip (e.g., 580 − 520 miscomputed, or debt not correctly
added). 0–7 = deficit and debt treated as interchangeable, or debt computed by replacing
(not adding to) the starting balance.
FRESH VARIANT: "A country collects $610 billion in revenue and spends $650 billion. Starting
debt was $900 billion. (a) This year's deficit? (b) Debt at year's end? (c) Flow vs. stock,
briefly." ANSWER: (a) 650 − 610 = $40 billion. (b) 900 + 40 = $940 billion. (c) same
flow/stock distinction.

================= PROBLEM 3 (25 pts) — Fiscal policy on the AD–AS diagram =================
PROBLEM: "An economy's aggregate demand and short-run aggregate supply are described by
P = 20 − Y/100 (AD) and P = 4 + Y/100 (SRAS), where Y is real GDP in billions and P is a
price-level index. The current equilibrium is Y* = 800, P* = 12. The government now enacts
CONTRACTIONARY fiscal policy (raises taxes and/or cuts spending) to fight an inflationary
concern, shifting AD to a new curve, P = 18 − Y/100. (a) Which direction did AD shift — left
or right? (b) Solve for the new equilibrium Y and P by setting the new AD equal to the
unchanged SRAS. (c) State in one sentence what happened to the price level and real output,
and why that direction makes sense for CONTRACTIONARY policy."
VETTED ANSWER: (a) AD shifted LEFT (the vertical intercept fell from 20 to 18 — at every
quantity, the price level associated with that AD curve is now lower, the signature of a
leftward shift). (b) Set 18 − Y/100 = 4 + Y/100 → 14 = 2Y/100 → Y = 700; P = 4 + 700/100 =
4 + 7 = 11. New equilibrium: Y = 700, P = 11. (c) Both the price level (12 → 11) and real
output (800 → 700) FELL — exactly what contractionary fiscal policy is meant to do: pull AD
back to cool an overheating economy, at the cost of some reduction in output.
RUBRIC: 25 = correct direction, correct algebra to Y=700/P=11, AND the P&Y-falls
interpretation stated correctly. 15–20 = correct algebra, but direction or interpretation
stated backward (e.g., calls it a rightward shift). 8–14 = algebra error (e.g., wrong sign
when combining the equations) but method basically sound. 0–7 = shifts the wrong curve
(e.g., shifts SRAS instead of AD) or reports P and Y both rising for a contractionary policy.
FRESH VARIANT: "Same AD/SRAS system (equilibrium Y=800, P=12). Instead, the government
enacts EXPANSIONARY fiscal policy, shifting AD to P = 22 − Y/100. (a) Direction? (b) New
equilibrium? (c) Interpret." ANSWER: (a) RIGHT (intercept rose 20→22). (b) 22−Y/100 =
4+Y/100 → 18 = 2Y/100 → Y=900; P=4+9=13. (c) Both P (12→13) and Y (800→900) ROSE — the
expected result of expansionary fiscal policy.

================= PROBLEM 4 (25 pts) — Crowding out, evenhandedly =================
PROBLEM: "A government is considering a large increase in spending to fight a recession, to
be funded by borrowing. (a) In 2–3 sentences, state the strongest CROWDING-OUT argument
against this plan. (b) In 2–3 sentences, state the strongest Keynesian response defending
the plan despite that concern. (c) In one sentence, explain why this is fundamentally a
question that mixes POSITIVE uncertainty (how big is the real-world effect?) with NORMATIVE
judgment (how much do we weigh the benefits vs. the costs?) rather than a question economics
alone can settle."
VETTED ANSWER: (a) Crowding-out argument: government borrowing competes with private
borrowers for the same pool of loanable funds, which can push up interest rates and
displace private investment that would otherwise have occurred, partially offsetting the
stimulus — and the growing debt has to be serviced going forward. (b) Keynesian response: in
a recession, resources (labor, capital) sit idle and loanable-funds markets are typically
slack, so the government's borrowing may compete far less with private investment than it
would in a fully-employed economy — the resources being put to work would otherwise have
sat unused. (c) It mixes positive uncertainty (economists do not have settled, universally
agreed numbers on how large real-world crowding out or the real-world multiplier actually
are) with normative judgment (how much weight to give today's unemployed vs. tomorrow's debt
service) — so no single "correct" answer follows from the economics alone.
RUBRIC: 25 = both (a) and (b) argued at genuinely FULL STRENGTH (not a strawman on either
side) AND (c) correctly names both the positive-uncertainty and the normative-judgment
components. 15–20 = both sides present but one is noticeably weaker/strawmanned, or (c) is
vague. 8–14 = only one side argued, or (c) misses the positive/normative distinction
entirely. 0–7 = declares one side objectively correct, or invents a specific statistic/study
to "settle" the question (a hard-rule violation — flag explicitly if this happens).
FRESH VARIANT: "Same scenario, but frame it around LAGS instead of crowding out: (a) the
strongest lags-based argument against acting now; (b) the strongest Keynesian response; (c)
positive vs. normative, one sentence." ANSWER: (a) By the time a recession is recognized, a
bill is passed, and money is actually spent, the economy may have already turned around on
its own, so the stimulus could arrive too late and add inflationary pressure instead of
help. (b) Even with lags, a severe or prolonged recessionary gap may still be underway when
the spending arrives, and automatic stabilizers already blunt the worst of the lag problem
by acting immediately, with discretionary policy adding further help once passed. (c) Same
positive-uncertainty-plus-normative-judgment structure.

================= COMPLETION =================
After all four problems (and any re-attempts), produce EXACTLY:
    STUDENT'S SCORE: X/100
    WEEK 7 ASSIGNMENT — The Multiplier, Automatic Stabilizers & Deficit/Debt
    Student: [name] | Date: ___
    Problem 1: a/25 — [one-line note]
    Problem 2: b/25 — [one-line note]
    Problem 3: c/25 — [one-line note]
    Problem 4: d/25 — [one-line note]
    Strongest skill: ___
    Worth another look: ___
Then say, verbatim: "Copy this entire report AND your share link to this chat, and submit both
in Canvas for this assignment." End with one genuine sentence of encouragement.

Instructor grading note + rubric (for Canvas)

Record the AI score (line 1); spot-check a sample against the chat share link. The embedded key makes scores consistent across chatbots. Summary rubric (each problem to 25, total 100):

Quantitative gate: PASS — every number pre-computed/re-verified: P1 1/(1−0.75)=4, 4×24=96 (variant 1/(1−0.6)=2.5, 2.5×30=75); P2 580−520=60, 1,200+60=1,260 (variant 650−610=40, 900+40=940); P3 solving 18−Y/100=4+Y/100 → Y=700, P=11 (variant 22−Y/100=4+Y/100 → Y=900, P=13).
Graph-logic check: PASS — every curve-shift claim verified: P3 AD (not SRAS) is the curve that shifts on a fiscal-policy change; contractionary fiscal policy shifts AD LEFT (P & Y both fall, 12→11 and 800→700); the variant's expansionary policy shifts AD RIGHT (P & Y both rise, 12→13 and 800→900) — matching the NUMBERS_PACK Week 5 anchor system exactly. No free-text item is auto-graded against a single "right" wording (P4 grades whether both sides are argued fairly + the positive/normative distinction, not a single scripted answer).

Canvas placement block

canvas_object    = Assignment
title            = "Week 7 Assignment — The Multiplier, Automatic Stabilizers & Deficit/Debt (adaptive)"
assignment_group = "Assignments"
points_possible  = 100
grading_type     = points
submission_types = [online_text_entry, online_url]
due_offset_days  = 6
published        = true
submission_note  = "Paste the AI summary report (score on line 1) + the chat share link."
provenance       = "~ Prof. Ashford's edition · Fall 2026 · built with thecoursemaker.com"

Traditional variant — for comparison. This course is configured adaptive learning, so the actual Week-7 assignment is the AI-coached version in I-assignment-and-rubric-week-07.md. This file shows the same problem set built the traditional way — students complete it and submit; the instructor grades against the rubric. (Choosing assignment_type = traditional at setup generates this style.)

Course: Principles of Macroeconomics (ECON 2) · Silver Oak University (fictional sample) · Prof. Ashford
Objective 6 · SLO A & B · Assignment 7 of 14 · 100 points · Due Sun, Oct 18

The Assignment

Show your work and write your interpretations in complete sentences. Submit as a document or text entry.

Problem 1 — Apply the spending multiplier (25 pts). The marginal propensity to consume (MPC) in a country is 0.75. (a) Compute the spending multiplier, 1/(1−MPC). (b) If the government increases spending by ΔG = $24 billion, what is the total change in real GDP (ΔY)? Show both steps and say what the final number means in words.

Problem 2 — Deficit (flow) vs. debt (stock) (25 pts). A country collects $520 billion in tax revenue and spends $580 billion this fiscal year.
(a) What is this year's budget deficit?
(b) The country's accumulated national debt was $1,200 billion at the start of the year, and this year's deficit gets borrowed. What is the debt at the end of the year?
(c) In one or two sentences, explain why the deficit and the debt are not the same kind of quantity (use the words "flow" and "stock").

Problem 3 — Fiscal policy on the AD–AS diagram (25 pts). An economy's aggregate demand and short-run aggregate supply are described by P = 20 − Y/100 (AD) and P = 4 + Y/100 (SRAS), where Y is real GDP in billions and P is a price-level index. The current equilibrium is Y* = 800, P* = 12. The government now enacts contractionary fiscal policy (raises taxes and/or cuts spending) to fight an inflationary concern, shifting AD to a new curve, P = 18 − Y/100.
(a) Which direction did AD shift — left or right?
(b) Solve for the new equilibrium Y and P by setting the new AD equal to the unchanged SRAS.
(c) State in one sentence what happened to the price level and real output, and why that direction makes sense for contractionary policy.

Problem 4 — Crowding out, evenhandedly (25 pts). A government is considering a large increase in spending to fight a recession, to be funded by borrowing.
(a) In 2–3 sentences, state the strongest crowding-out argument against this plan.
(b) In 2–3 sentences, state the strongest Keynesian response defending the plan despite that concern.
(c) In one sentence, explain why this is fundamentally a question that mixes positive uncertainty (how big is the real-world effect?) with normative judgment (how much do we weigh the benefits vs. the costs?) rather than a question economics alone can settle.

AI note. This is the traditional format — submit your own work. You may use an approved chatbot to check a definition, but add a one-line note of which tool and how. (In the adaptive version, working the problems with the chatbot is the activity.)

Grading rubric — 100 points

Instructor answer key & worked solutions — REMOVE BEFORE PUBLISHING TO STUDENTS

• P1: Multiplier = 1/(1−0.75) = 1/0.25 = 4. ΔY = 4 × 24 = $96 billion. Interpretation: the initial $24 billion ripples through the economy as it becomes income and gets re-spent round after round, settling at a total change four times the original spending change. (Numbers pre-computed/verified.)
• P2: (a) Deficit = 580 − 520 = $60 billion (a flow, measured per year). (b) Debt = 1,200 + 60 = $1,260 billion (a stock, the running total — this year's deficit is added to, not substituted for, the existing balance). (c) The deficit describes one year's activity (like a paycheck); the debt is the accumulated balance at a point in time (like a bank balance) — which is exactly why the deficit gets added onto the debt rather than replacing it. (Verified.)
• P3: (a) AD shifted LEFT (the vertical intercept fell from 20 to 18 — the signature of a leftward shift). (b) Set 18 − Y/100 = 4 + Y/100 → 14 = 2Y/100 → Y = 700; P = 4 + 700/100 = 4 + 7 = 11. (c) Both the price level (12 → 11) and real output (800 → 700) fell — exactly what contractionary fiscal policy is meant to accomplish, cooling an overheating economy at the cost of some output. (Curve-shift direction verified against the canon.)
• P4: (a) Crowding-out argument: government borrowing competes with private borrowers for loanable funds, which can push up interest rates and displace private investment, partially offsetting the stimulus, while the growing debt requires future servicing. (b) Keynesian response: in a recession, idle resources and slack loanable-funds markets mean the government's borrowing may compete far less with private investment than in a fully-employed economy — the resources put to work would otherwise have sat unused. (c) This mixes positive uncertainty (economists lack settled, universally-agreed figures on the real-world size of crowding out or the multiplier) with normative judgment (how much weight to give today's unemployed vs. tomorrow's debt service) — so no single "correct" answer follows from the economics alone. (Full credit requires BOTH sides argued at genuine full strength — a strawman on either side loses points, per the evenhandedness rule.)

Quantitative gate: PASS — all numbers re-computed in Python (P1: 1/0.25=4, 4×24=96; P2: 580−520=60, 1200+60=1260; P3: solving 18−Y/100=4+Y/100 gives Y=700, P=11).
Graph-logic check: PASS — every curve-shift claim verified against the canon: AD (not SRAS) is the curve fiscal policy shifts; contractionary fiscal policy shifts AD LEFT with both P and Y falling (12→11, 800→700), matching the direction rule that AD-left ⇒ P↓, Y↓.

Quality gate (self-checked): distractors/traps named: multiplier-vs-money-multiplier confusion, stopping at the multiplier instead of multiplying by ΔG, deficit-vs-debt (flow-vs-stock), shifting the wrong curve on a fiscal-policy change, and declaring crowding out either always-decisive or never-relevant instead of the fair two-sided read.

Canvas placement block

canvas_object    = Assignment
title            = "Week 7 Assignment — The Multiplier, Automatic Stabilizers & Deficit/Debt (traditional)"
assignment_group = "Assignments"
points_possible  = 100
grading_type     = points
submission_types = [online_upload, online_text_entry]
due_offset_days  = 6
rubric_ref       = "w07-assignment-rubric"
published        = true
provenance       = "~ Prof. Ashford's edition · Fall 2026 · built with thecoursemaker.com"