Question 1

If the marginal propensity to import is 0.2, then a $1,000 increase in income will:

Accepted Answer

A)  decrease net exports by 2000. 
B)  increase net exports by 200. 
C)  decrease net exports by 200. 
D)  increase net exports by 1000. 
A)  decrease net exports by 2000. 
B)  increase net exports by 200. 
C)  decrease net exports by 200. 
D)  increase net exports by 1000.

Question 2

-Refer to Table 11.5. If G increases to 400 (all other components constant), then the equilibrium income in this economy increases by:

Accepted Answer

A)  100. 
B)  500. 
C)  400. 
D)  600. 
A)  100. 
B)  500. 
C)  400. 
D)  600.

Question 3

Figure 11.1
-Refer to Figure 11.1. If the expenditures in the economy correspond to C + I, what should businesses do to get back to equilibrium if the economy is at point b?

Accepted Answer

A)  increase production, because expenditures exceed production 
B)  decrease production, because expenditures are less than production 
C)  decrease production, because expenditures exceed production 
D)  increase production, because expenditures are less than production 
A)  increase production, because expenditures exceed production 
B)  decrease production, because expenditures are less than production 
C)  decrease production, because expenditures exceed production 
D)  increase production, because expenditures are less than production

Question 4

When the consumption function is expressed as C = Ca + b (y- T), taxes are collected by the government as:

Accepted Answer

A)  a constant proportion of income y. 
B)  a decreasing proportion of income y. 
C)  an increasing proportion of income y. 
D)  a lumpsum, and independent of y. 
A)  a constant proportion of income y. 
B)  a decreasing proportion of income y. 
C)  an increasing proportion of income y. 
D)  a lumpsum, and independent of y.

Question 5

A tax _______ income.

Accepted Answer

A)  increase raises national 
B)  increase decreases planned 
C)  cut decreases disposable 
D)  cut increases disposable 
A)  increase raises national 
B)  increase decreases planned 
C)  cut decreases disposable 
D)  cut increases disposable

Question 6

Recall Application 4, "The Locomotive Effect: Why Do Foreign Demand Affects a Country's Output," to answer the following questions:
-According to the Application, a US recession could cause a recession abroad.

Accepted Answer

A) True 
 B)False

Question 7

-Refer to Table 11.3. At an aggregate output level of $3,000 million, the unplanned inventory change is:

Accepted Answer

A)  $1,000 million. 
B)  0. 
C)  $10 million. 
D)  - $10 million. 
A)  $1,000 million. 
B)  0. 
C)  $10 million. 
D)  - $10 million.

Question 8

If imports are expressed as M = my where M is the level of imports and y is the level of GDP, then the government spending multiplier equals:

Accepted Answer

A)  b/(b- m). 
B)  m/(1- (b- m). 
C)  1/(1- m). 
D)  1/(1- (b- m). 
A)  b/(b- m). 
B)  m/(1- (b- m). 
C)  1/(1- m). 
D)  1/(1- (b- m).

Question 9

-Refer to Table 11.2. At an aggregate output level of $200, the unplanned inventory change is:

Accepted Answer

A)  - $150. 
B)  - $100. 
C)  - $50. 
D)  $100. 
A)  - $150. 
B)  - $100. 
C)  - $50. 
D)  $100.

Question 10

The multiplier for government spending can be calculated using which formula?

Accepted Answer

A)  (1- MP
C) /MPC 
B)  1/(1- MP
C)  
C)  - MPC/(1- MP
C)  
D)  1/MPC 
A)  (1- MP
C) /MPC 
B)  1/(1- MP
C)  
C)  - MPC/(1- MP
C)  
D)  1/MPC

Question 11

If the consumption function is C = 100 + 0.6Y, then the multiplier is:

Accepted Answer

A)  .6. 
B)  1/6. 
C)  2.5. 
D)  6. 
A)  .6. 
B)  1/6. 
C)  2.5. 
D)  6.

Question 12

The marginal propensity to consume is the increase in consumption brought about by an increase in wealth.

Accepted Answer

A) True 
 B)False

Question 13

Define the multiplier and identify the variable(s) determines its size.

Accepted Answer

The multiplier represents the effects of

Question 14

The consumption function describes the relationship between consumption expenditures and:

Accepted Answer

A)  the rate of growth of GDP. 
B)  the level of income. 
C)  the level of the interest rates. 
D)  the level of prices. 
A)  the rate of growth of GDP. 
B)  the level of income. 
C)  the level of the interest rates. 
D)  the level of prices.

Question 15

Assume that C = 150 + 0.9Y and I = 50. The balanced budget multiplier is:

Accepted Answer

A)  1. 
B)  10. 
C)  - 9. 
D)  - 10. 
A)  1. 
B)  10. 
C)  - 9. 
D)  - 10.

Question 16

An unexpected increase in inventories is usually observed before a recession.

Accepted Answer

A) True 
 B)False

Question 17

Recall Application 4, "The Locomotive Effect: Why Do Foreign Demand Affects a Country's Output," to answer the following questions:
-According to the application, the US growth acts as a "locomotive" for the growth rates of other countries because:

Accepted Answer

A)  the US exports new trains to the other countries. 
B)  other countries will experience a recession when the US grows. 
C)  the US will experience a recession when the other countries grow. 
D)  other countries grow when the US grows. 
A)  the US exports new trains to the other countries. 
B)  other countries will experience a recession when the US grows. 
C)  the US will experience a recession when the other countries grow. 
D)  other countries grow when the US grows.

Question 18

A decrease in the price level will cause a:

Accepted Answer

A)  shift in the aggregate demand curve upwards. 
B)  movement along the aggregate demand curve upwards. 
C)  movement along the aggregate demand curve downwards. 
D)  shift in the aggregate demand curve downwards. 
A)  shift in the aggregate demand curve upwards. 
B)  movement along the aggregate demand curve upwards. 
C)  movement along the aggregate demand curve downwards. 
D)  shift in the aggregate demand curve downwards.

Question 19

If the economy finds itself at a point where planned spending is greater than output, then we will expect to see:

Accepted Answer

A)  an equilibrium level of output. 
B)  an increase in inventories. 
C)  a decrease in inventories. 
D)  a decrease in planned spending. 
A)  an equilibrium level of output. 
B)  an increase in inventories. 
C)  a decrease in inventories. 
D)  a decrease in planned spending.

Question 20

If output is less than aggregate planned expenditures, there will be an unplanned decrease in inventories.

Accepted Answer

A) True 
 B)False

If the marginal propensity to import is 0.2, then a $1,000 increase in income will:

-Refer to Table 11.5. If G increases to 400 (all other components constant), then the equilibrium income in this economy increases by:

Figure 11.1 -Refer to Figure 11.1. If the expenditures in the economy correspond to C + I, what should businesses do to get back to equilibrium if the economy is at point b?

When the consumption function is expressed as C = Ca + b (y- T), taxes are collected by the government as:

A tax _______ income.

Recall Application 4, "The Locomotive Effect: Why Do Foreign Demand Affects a Country's Output," to answer the following questions: -According to the Application, a US recession could cause a recession abroad.

-Refer to Table 11.3. At an aggregate output level of $3,000 million, the unplanned inventory change is:

If imports are expressed as M = my where M is the level of imports and y is the level of GDP, then the government spending multiplier equals:

-Refer to Table 11.2. At an aggregate output level of $200, the unplanned inventory change is:

The multiplier for government spending can be calculated using which formula?

If the consumption function is C = 100 + 0.6Y, then the multiplier is:

The marginal propensity to consume is the increase in consumption brought about by an increase in wealth.

Define the multiplier and identify the variable(s) determines its size.

The consumption function describes the relationship between consumption expenditures and:

Assume that C = 150 + 0.9Y and I = 50. The balanced budget multiplier is:

An unexpected increase in inventories is usually observed before a recession.

Recall Application 4, "The Locomotive Effect: Why Do Foreign Demand Affects a Country's Output," to answer the following questions: -According to the application, the US growth acts as a "locomotive" for the growth rates of other countries because:

A decrease in the price level will cause a:

If the economy finds itself at a point where planned spending is greater than output, then we will expect to see:

If output is less than aggregate planned expenditures, there will be an unplanned decrease in inventories.

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nations Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

Exam 11: The Income-Expenditure Model

If the marginal propensity to import is 0.2, then a $1,000 increase in income will:

-Refer to Table 11.5. If G increases to 400 (all other components constant), then the equilibrium income in this economy increases by:

Figure 11.1 -Refer to Figure 11.1. If the expenditures in the economy correspond to C + I, what should businesses do to get back to equilibrium if the economy is at point b?

When the consumption function is expressed as C = Ca + b (y- T), taxes are collected by the government as:

A tax _______ income.

Recall Application 4, "The Locomotive Effect: Why Do Foreign Demand Affects a Country's Output," to answer the following questions: -According to the Application, a US recession could cause a recession abroad.

-Refer to Table 11.3. At an aggregate output level of $3,000 million, the unplanned inventory change is:

If imports are expressed as M = my where M is the level of imports and y is the level of GDP, then the government spending multiplier equals:

-Refer to Table 11.2. At an aggregate output level of $200, the unplanned inventory change is:

The multiplier for government spending can be calculated using which formula?

If the consumption function is C = 100 + 0.6Y, then the multiplier is:

The marginal propensity to consume is the increase in consumption brought about by an increase in wealth.

Define the multiplier and identify the variable(s) determines its size.

The consumption function describes the relationship between consumption expenditures and:

Assume that C = 150 + 0.9Y and I = 50. The balanced budget multiplier is:

An unexpected increase in inventories is usually observed before a recession.

Recall Application 4, "The Locomotive Effect: Why Do Foreign Demand Affects a Country's Output," to answer the following questions: -According to the application, the US growth acts as a "locomotive" for the growth rates of other countries because:

A decrease in the price level will cause a:

If the economy finds itself at a point where planned spending is greater than output, then we will expect to see:

If output is less than aggregate planned expenditures, there will be an unplanned decrease in inventories.

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nations Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters